ACCEL TRANSMATIC LIMITED Annual Report 2009-10

BOARD OF DIRECTORS

N R Panicker Chairman

M R Narayanan Independent Director

A Mohan Rao Independent Director

Philip John Whole Time Director

S T Prabhu Company Secretary

Statutory Auditors Registered office M/s. Varma & Varma T.C 17 / 27 Jagathy Chartered Accountants Thiruvananthapuram 695 014 Adyar, Chennai 600 020 Phone:+91 471 234 2215 / 2265 Fax: +91 471 2339205

Internal Auditors Corporate office M/s. Vijayakumar & Easwaran “Accel House”, 75 Nelson Manickam Road Chartered Accountants Aminjikarai, Chennai 600 029 Sasthamangalam, Trivandrum 695 010 Phone:+91 44 44 4225 2200 E Mail : [email protected] Website : www.acceltransmatic.com

Legal advisors Technologies Division M/s S Ramasubramaniam & Associates Ushus Technologies 6/1 Bishop Wallers Avenue (West) 311, Nila, Technopark, Thiruvananthapuram -695581. Mylapore, Chennai 600 004 Kerala, India Phone : +91-471-3061234 Fax: +91-471-3061222 Email: [email protected]

Registrars & transfer agents Animation Division M/s Integrated Enterprises (India) Ltd 1) No.9, Porur Somasundaram Street, T.Nagar, 2nd Floor, Kences Towers Chennai - 600 017. No. 1 Ramakrishna Street, North Usman Road Phone: +91-44-28341465 / 42071332 T Nagar, Chennai 600 017

Bankers 2) Kinfra Film & Video Park, State Bank of India Kazhakuttam, Thiruvananthapuram - 695 585 Commercial Branch, Phone : +91-471-2417434 / 2417435 Thiruvananthapuram 695 014

1 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Forward looking statement

In this annual report, we have mentioned certain forward looking information to enable investors to comprehend our business model and future prospects and make informed investment decisions. This annual report and other communications from us, oral or written, may include certain forward looking statements that set out certain anticipated results based on managements assumptions and plans. Even though the management believes that they have been prudent in making such assumptions, we cannot guarantee that these forward looking statements will be realised. We undertake no obligation to update forward looking statements. The achievement of results is subject to various risks, known and unknown. We request readers to bear this in mind while reading this report.

Contents

Notice of 24th annual general meeting 3

Directors’ report 6

Management discussion and analysis 7

Reports on corporate governance 11

CEO / CFO Certificate 18

Directors Responsibility Statement 19

Standalone financials 20

Accounts of Subsidiary 41

Consolidated financials 43

2 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Notice to such approvals / consents, if any, approval of the company be and is hereby accorded to the appointment of Mr. Philip John as Wholetime Director for a period of 3 (Three) years Notice is hereby given that the Twenty fourth annual general with effect from 01.04.2009 on the terms, conditions including meeting of the members of Accel Transmatic Limited will be held remuneration and perquisites as set out in the Explanatory at Conference hall, Park Centre, KINFRA Film & Video Park, Kazha- Statement annexed to the Notice convening this meeting, kootam, Trivandrum-695 585 on Monday September 27, 2010 at with liberty to the Board of Directors (hereinafter referred 11am to transact the following business : to as “the Board”, which term shall be deemed to include any Committee of the Board constituted to exercise its powers, ORDINARY BUSINESS: including the powers conferred by this Resolution) to alter and vary the terms and conditions and / or remuneration, 1. To consider and adopt the audited Profit and Loss account subject to the same not exceeding the limits specified under for the financial year ended 31st March 2010 and the audited Schedule XIII to the Companies Act, 1956 or any statutory Balance Sheet as at that date and Reports of the Directors and modification(s) or re-enactment thereof. Auditors thereon. RESOLVED FURTHER THAT the Board be and is hereby 2. To appoint a Director in place of Mr. N.R. Panicker who retires authorized to take such steps as may be necessary to execute by rotation and being eligible has offered himself for re- and sign the agreement and other documents and desirable appointment as a Director of the company. A brief resume of to implement and give effect to the foregoing Resolution. Mr. N.R. Panicker has been given in the Corporate Governance section of the Directors’ Report. RESOLVED FURTHER THAT during the currency of the term of the Wholetime Director, wherein any financial year, Accordingly, to consider and, if thought fit, to pass with or the Company has no profits or its profits are inadequate, without modification, the following resolution as an ordinary the Company do pay the Wholetime Director, minimum resolution : Remuneration by way of salary and perquisites as specified as per relevant applicable provision of law including provision as “RESOLVED THAT Mr. N.R. Panicker, be and is hereby re- contained in Schedule XIII to the Act. appointed a Director of the company.” Explanatory statement, pursuant to Section 173 of the 3. To appoint a Director in place of Mr. A. Mohan Rao who retires Companies Act, 1956. by rotation and being eligible has offered himself for re- appointment as a Director of the company. A brief resume of Item 5 Mr. A. Mohan Rao has been given in the Corporate Governance section of the Directors’ Report. The company had passed a resolution in Annual General Meeting held on 27.07.2009 appointing Mr. Philip John as a Accordingly, to consider and, if thought fit, to pass with or Wholetime Director, for a period of 3 years, with effect from without modification, the following resolution as an ordinary 01.04.2009 to 31.03.2012 as an Ordinary Resolution. resolution : It was also provided in the Resolution that in case the com- “RESOLVED THAT Mr. A. Mohan Rao, be and is hereby re- pany has inadequate profits, a minimum remuneration could appointed a Director of the company.” be paid to the Director in the year of loss or inadequacy of profits. 4. To appoint Auditors and to fix their remuneration and for this purpose to consider and, if thought fit, pass with or The shareholders / company had approved it as an Ordinary without modification, the following resolution as an ordinary Resolution in the Annual General Meeting held on 27.07.2009, resolution; provided that in the event of the provisions unanimously. of Section 224A of the Companies Act, 1956, becoming applicable to the Company on the date of holding this As per Schedule XIII Part II Section II of the Companies Act, meeting, the same will be proposed as a special resolution. 1956, a minimum remuneration can be paid to the Director in the year of loss or inadequacy of profit, provided the company “RESOLVED THAT the Auditors, M/s. Varma & Varma, Chartered had passed such a resolution as a Special Resolution. Accountants, Firm No.4532S who retire at the conclusion of this meeting, be and are hereby re-appointed Auditors of the Accordingly, the company has proposed to pass the resolu- Company to hold office from the conclusion of this Annual tion as a Special Resolution in the ensuing annual general General Meeting until the conclusion of the next Annual meeting. General Meeting of the company, at a remuneration to be The Board recommends the resolution. fixed by the Board, in consultation with the Auditors. Mr. Philip John is interested in the resolution, as it is relates to his appointment and payment of remuneration to him. SPECIAL BUSINESS: None of the other Directors is interested in the resolution set 5. To consider and, if thought fit, to pass with or without out in the Notice. modification(s), the following resolution as a Special Resolution : Mr. Philip John holds 152,721 shares in the Company.

“RESOLVED THAT in accordance with the provisions of Mr. Philip John is also a Director in one of the Company ‘s sub- Sections 198, 269, 309 read with Schedule XIII and all other sidiary, Accel North America Inc. applicable provisions, if any, of the Companies Act, 1956 or any statutory modification(s) or re-enactment thereof and subject Mr. Philip John is not related to any other Director of the Com- pany. 3 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

this Annual General Meeting in terms of section 269 of the Act. This explanatory statement together with the accompanying The Resolution at item 5 of Special Business is intended for notice may be treated as an abstract of the terms of appoint- this purpose. ment of Mr. Philip John and payment of remuneration to him and Memorandum of Interest under section 302(7) of the I. General Information Companies Act, 1956. (1) Nature of Interest Accordingly, the company is proposing to pass this resolution The Company is a provider of Information Technology and in this Annual General Meeting as a Special Resolution such Media solutions & services. that the minimum remuneration is paid to Mr. Philip John. (2) Date or expected date of commencement of commercial Information required under Clause (iv) of proviso to para- production. graph 1(B) of Section II of Part II of Schedule XIII of the Compa- The Company has been in business for about 23 years. nies Act, 1956 is given below : (3) In case of new companies, expected date of commencement The information below is in relation to the proposal contained of activities. in Item No.5 of the Notice relating to re-appointment of Mr. Not applicable, as the company is an existing company. Philip John as Wholetime Director of the Company. (4) Financial performance based on given indicators. (i) Background details (Amount in rupees lacs) 31.03.2010 31.03.2009 31.03.2008 An engineer and a M.Tech from IIT, Chennai, with 33 years of experience in organizations like ER&DC, Thiruvananthapuram, Sales 1828.63 3677.46 4134.15 as the President of Software division, NEST group of compa- Profit Before Tax (142.53) (451.06) 396.43 nies and Managing Director of erstwhile Ushus Technologies Private Limited. Profit After Tax (165.17) (442.83) 300.34 Shareholders’ Funds 1349.52 1350.11 1435.05 (ii) Past Remuneration Rate of Dividend on NIL NIL 6% For the financial year, 2009–10, Mr. Philip John ‘s total equity shares (%) remuneration was Rs. 15.09 lacs. (5) Export performance The Company ‘s export for the past three years are as follows : (iii) Recognition or awards / job profile and his suitability. ( Amount in Rupees Lacs )

Mr. Philip John has managed the technologies division ably 31.03.2010 31.03.2009 31.03.2008 over the last five years. Income from services 1415.47 2033.60 1212.57

In the opinion of the Board, he is eminently suited for the position he holds. (6) Foreign investments or collaborators, if any. Not applicable.

(iv) Remuneration proposed (7) The company as a part of its long term plan has invested in animation business which has a long gestation period. This The remuneration of Mr. Philip John is set out above. has resulted in losses or inadequate profits for the year. Even- though the company incurred losses, it has gained invaluble (v) Comparative remuneration profile with respect to industry, experience in its line of business and is experted to make prof- size of the company, profile of the position and person. its in future years.

The substantive remuneration of Mr. Philip John is not out of tune with the remuneration in similar sized companies in same segment of business. By Order of the Board

(vi) Pecuniary relationship directly or indirectly with the company, Place : Chennai N.R. Panicker or relationship with managerial personnel, if any. Date : May 27, 2010 Chairman

Other than the remuneration and equity holdings as stated above, Mr. Philip John has no other pecuniary relationship directly or indirectly with the company or any of its Directors.

III. Other Information

The Agreement also sets out the duties and various obligations of Mr. Philip John. The appointment of Mr. Philip John as a Wholetime Director and the remuneration payable to him as aforesaid, are required to be approved by the members at

4 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Notes: 12. Members holding shares in the physical form can avail of the nomination facility by filing Form 2B (in duplicate) with the 1. A member entitled to attend and vote is entitled to appoint company or its registrars and share transfer agents, M/s. In- a proxy to attend and vote instead of himself/herself and the tegrated Enterprises (India) Limited, 2nd floor, Kences Towers, proxy need not be a member, a proxy may not vote except No.1 Ramakrishna Street, North Usman Road, T. Nagar, Chennai on a poll. the proxy form, in order to be effective, should be – 600 017. received at the registered office of the company not later than 48 hours before the commencement of the meeting. 13. In case the mailing address mentioned on this annual report is without Pin-code, Members are requested to kindly notify 2. The Explanatory Statement pursuant to Section 173(2) of the their Pin-codes immediately. Companies Act, 1956 in respect of Special Business as set out above to be transacted at the meeting is annexed hereto and 14. Members are requested to bring their Annual Report copies forms part of this notice. and the duly filled in attendance slips sent herewith while coming for attending the Annual General Meeting. 3. The Register of members and share transfer books of the Company shall remain closed during the Book Closure period, By Order of the Board ie., from Friday 17th September, 2010 to Monday, 27th Sep- tember 2010) both days inclusive). Place : Chennai N.R. Panicker Date : May 27, 2010 Chairman 4. Corporate members intending to send their authorized rep- resentatives to attend the meeting are requested to send a certified true copy of the board resolution authorizing their representative to attend and vote on their behalf at the meeting upto the date of Annual General Meeting.

5. The Members / Proxies are requested to bring their copy of the annual report with them at the meeting and to produce the admission slip, duly completed and signed, at the entrance for admission to the meeting hall.

6. Notice alongwith explanatory statement, Annual Report as well as annual accounts of the subsidiary companies and Reg- ister of Directors’ Shareholding are open for inspection, during the business hours, at the Registered Office of the Company.

7. The particulars of the Director, retiring by rotation and eligible for re-appointment, are given in the report of the Directors to the members and also in the report on corporate governance.

8. The Company whole-heartedly welcomes members / proxies at the annual general meeting of the company, however, the members / proxies may please note that no gifts / gift cou- pons will be distributed at the meeting.

9. Members who wish to obtain any information on the company or the accounts may visit company ‘s website www.acceltransmatic.com or may send their queries at least 10 days before the date of the meeting to the company at the corporate office at III Floor, 75, Nelson Manickam Road, Chennai – 600 029 or at the company ‘s registered office at T.C 17/27, Jagathy, Trivandrum – 695 014 or email to stprabhu@transmaticsys- tems.com.

10. While members holding shares in physical form may write to the company for any change in their address and bank man- dates, members having shares in electronic form may inform any change in address and bank details to their depository participant immediately so as to enable the company to dis- patch dividend warrants at correct address.

11. Members holding more than one share certificate in the same name or joint names in same order but under different Ledger folios, are requested to apply for consolidation of such Folios and send the relevant share certificates to the registrars and share transfer agents to enable them to consolidate all such holdings into one single account.

5 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Director’s report Consolidated financial statements

Consolidated financial statements, prepared in accordance Dear shareholders, with Accounting Standard AS 21, issued by the Institute of Your directors are pleased to present the 24th annual report to- Chartered Accountants of India, and as required by the listing gether with the audited accounts of the company for the year agreement are attached and forms part of the annual report ended March 31, 2010. and accounts. The summary results are provided in the table above. (INR in millions) Report on conservation of energy, technology absorption etc. Particulars Standalone 2010 2009 Information as required under section 217 (1) (e) of the companies act, 1956 read with companies (disclosure of particu- Sales, services & other income 182.86 382.02 lars in the report of board of directors) rule, 1988 regarding Profit before interest, depn & tax 38.98 14.87 conservation of energy, technology absorption are given in annexure I to this Report. The details regarding foreign ex- Interest 24.52 34.94 change earnings and outgo are being mentioned in the notes Depreciation 28.65 25.03 to the accounts. Provision for tax 1.53 (0.82) Management discussion and analysis Profit after tax (16.45) (44.28) The management discussion and analysis and various initia- Turnover tives and future prospects of the company are provided, sepa- rately as annexure II The details of revenues by segments are given below: (INR in millions) Report of corporate governance Particulars March 31, 2010 March 31, 2009 A report on Corporate Governance together with auditor’s Software Services 110.77 112.45 certificate on compliance with the conditions of Corporate Animation Services 34.49 60.47 Governance as stipulated under Clause 49 of the Listing Systems & Services - 209.11 Agreement is provided in annexure III to this report Others 37.60 - Auditors certificate on corporate governance Total 182.86 382.03 The certificate issued by the auditors of the company on corporate governance is given in Annexure IV Review of operations : CEO /CFO certification The year under review was challenging due to the economic slow down. The software division consolidated its relation- The Chairman and the Company Secretary & Complaince ship with its overseas customers, and reported an EBITDA of Officer have submitted a certificate to the Board regarding Rs.21.35 mn on a turnover of Rs. 110.77 mn. The animation the financial statements and other matters as required under division reported a net loss of Rs.54.40 mn. The turnover of the Clause 49 (V) of the Listing Agreement. This is provided as An- animation division was Rs.34.49 mn excluding the value of in- nexure V to this report tellectual property capitalized of Rs.52.30 mn. Directors responsibility statement The highlights of the performance are discussed in detail in the management discussion and analysis report attached as The directors responsibility statement pursuant to sub annexure to this report. section 2 AA of Section 217 of the Companies Act 1956 is provided in annexure VI During the year under review, the company reported a net turnover of Rs182.86 mn as compared to Rs. 382.02 mn for the Particulars of employees year ended March 31, 2009., The financial results of the company is not comparable with the previous year ‘s figures as The particulars regarding employees of the company pursu- one of the divisions, Systems and Services Division, was hived ant to Section 217 (2A) of the Companies Act, 1956 read with off during the year as it was a non core activity and was in- the Companies (Particulars of Employees) Rules, 1975 are giv- curring losses due to lack of sufficient orders. The company en in annexure VII to the Director’s Report. reported a net loss of Rs. 16.45 mn. On a consolidated basis, the net turn over was Rs.232 mn. as compared to the previous Subsidiaries year net turnover of Rs. 414 mn. During the year under review the company had cash crunch due to losses incurred and has The company’s subsidiary in USA reported a turnover of delayed statutory payments beyond due dates as mentioned Rs.130.37 mn. (USD 2.73 mn ) and the profit after tax was Rs. in annexure to the auditor’s report. The company has since 2.39 mn (USD 0.05 mn) made good all the statutory payments due as on the date of the balance sheet. The company’s cash flow is expected to im- During the year under review, the subsidiary in Japan was ac- prove during the currunt financial year. quired by the JV partner and as on 31.03.2010 it is no longer a subsidiary of the company. The subsidiary was divested, as the turnover was insignificant at Rs.2.9 mn with a loss of Rs. 0.9 million. The company shall continue to do business with the 6 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

JV partner on a case to case basis. This will save costs, while ANNEXURES TO THE DIRECTORS’ REPORT continuing to do business with Japanese clients. Particulars pursuant to Companies (Disclosure of Particulars in Dividends the Report of Board of Directors) Rules, 1988. Considering the losses and the necessity to conserve resources, the Directors do not recommend any dividend on Annexure I the equity shares. Conservation of energy, technology absorption, adaptation Directors and innovation and foreign exchange earnings and outgo Mr. N.R. Panicker and Mr. A. Mohan Rao, Directors of the company , retires by rotation and are eligible for re-appointment. The company’s operations involve low energy consumption Auditors and therefore the scope of energy conservation is limited. The Varma & Varma, Chartered Accountants, Chennai, auditors of company has taken steps to conserve electricity consumption the Company retire at the ensuing annual general meeting, in offices. The company has also installed energy saving de- and being eligible, offer themselves for reappointment. The vices and lighting in offices. company has received confirmation from them that their ap- The company is in high technology business and is constantly pointment will be within the limits prescribed under Section absorbing and upgrading the latest technology to meet the 224(1B) of the Companies Act, 1956. The audit committee of current challenges at all levels. The company uses the latest the Board has recommended their reappointment. The nec- Internet based technology for its communication needs. essary resolution is being placed before the shareholders for approval. The details regarding foreign exchange earnings and outgo are given below: Quality Management Your company’s quality policy is to enhance customer satis- Foreign Exchange Earnings and Outgo faction through continued improvement of skills, processes ( INR in Millions ) and technologies. During the year the company continued to Year ended 31.03.2010 31.03.2009 invest in technologies, infrastructure and processes in order to keep our quality management systems updated. Our software (a) Foreign exchange earnings 128.90 139.90 development processes (assessed at CMM L-3) ensure high (b) CIF value of Imports Nil 32.75 quality deliverables, low risk and sustainable business. Expenditure in foreign (c) 9.41 14.76 Internal control systems currency Your company has adequate internal control procedures commensurate with the size and nature of its operations. The audit committee constituted by the Board of Directors is For and on behalf of the functioning effectively, Internal audit for the year 2009 – 2010 Board of directors was carried out by M/s. Vijayakumar & Easwaran, Chartered Accountants covering all areas of operations. All significant Place : Chennai. N. R. Panicker observations, if any, were discussed in the audit committee, Date : May 27, 2010 Chairman which met 4 times during the year under review.

Depository systems Annexure II to the Director’s Report As the members are aware, your Company ‘s shares are trad- able compulsorily in electronic form and your company has MANAGEMENT DISCUSSION AND ANALYSIS. established connectivity with both the depositories, i.e., Na- tional Securities Depository Limited (NSDL) and Central De- The Year in brief pository Services (India) Limited (CDSL). In view of the numer-

ous advantages offered by the Depository system, members During the year under review, the company reported a net are requested to avail of the facility of dematerialization of the turnover of Rs182.86 mn as compared to Rs. 382.02 mn for the company ‘s shares on either of the Depositories as aforesaid. year ended March 31, 2009., The financial results of the company is not comparable with the previous year ‘s figures as Acknowledgement one of the division, Systems and Services Division, was hived Your directors would like to express their grateful apprecia- off during the year as it was a non core activity and was in- tion for the assistance and co-operation received from central curring losses due to lack of sufficient orders. The company and state governments, financial institutions, banks, govern- reported a net loss of Rs. 16.45 mn . On a consolidated basis, ment authorities, customers, suppliers and investors during the net turn over was Rs.232 mn. as compared to the previous the year under review. Your directors wish to place on record year turnover of Rs. 414 mn. their deep sense of appreciation, of the dedicated and sincere services rendered by the employees of the company for its success.

For and on behalf of the Board of directors

Place : Chennai. N. R. Panicker Date : May 27, 2010 Chairman

7 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Business Model

The company has two divisions, namely, Technologies division and Animation division.

Technologies Division (www.ushustech.com) – known as Ushus Technologies, the software arm of the company and a quality provider of offshore technology solutions to world leaders including a few of the Fortune 500s, in rolling out technologically advanced software products to industry verticals as well as the mass consumer market. Leveraging its ability to handle high-technology proj- ects with good quality and cost effective delivery, Ushus made forays in to the US technology market and has been able to forge successful on-going partnerships with premier engineering and business houses that have large experience and high maturity in outsourcing and multi-sourcing. Technologies development centre is located at Technopark in Trivandrum with marketing offices in Japan and the US. Software Industry Overview The emergence of Global Delivery Model (GDM) provided companies with new methods of reducing costs. The outsourcing of simple application and maintenance to emerging economies dramatically lowered the fixed costs for companies. But the positive shift towards global sourcing couple with GDM gave and added advantage for organizations with respect to wider choice in terms of capabilities across multiple locations. Rapidly evolving technologies meant that it was difficult to find the relevant expertise within the organization to justify the demand in the market. Outsourcing providers offer the knowledge and the resources which the companies found hard to identify within the organization or did not have the time or budget to acquire from the industry to justify the time to market conditions.

Over the years outsourcing services and delivery models have evolved to encompass more advanced capabilities. GDM has already been widely accepted across industries and organizations have started to view GDM more strategically considering the recessionary effects and the recovery path ahead. While the initial goals of outsourcing were capabilities and cost, but these days mature outsourc- ers also have and added advantage of competitiveness and drive for the transformational change. From R&D and engineering services companies have now started entrusting service providers with more and upstream strategic functions. The focus of companies from cost arbitrage has now shifted towards talent acquisition in the outsourcing Industry.

Technical competencies of the technology division – The division caters the software needs of product companies in the following verticals

Consumer Industrial Healthcare Automative Telecom Electronics Automation

• 3D Re-construction • Infotainment • Carrier Ethernet • Device driver • SEMI Automation development • Image • Process • Body Electronics • IP / MPLS Metro • Firmware Enhancement Automation development • Engine & Power • IP Core • DICOM • Building • Kernel Proting train control Automation • BSP Development • Tools development • VOIP • Power & Energy • Safety • Custom application Peripheral Systems • Layer 2 development • Statistical & Neural • Algorithms for refineries & • GSM • Software Packaging chemical plants

The division has developed skills and competency in high technology areas such as embedded systems, network protocol development, multimedia and windows applications. The division has experience in product development, product testing, beta testing support and internationalization requirements. The technological expertise spans custom design, development, and testing of software based on Real Time Operating Systems, firm ware/ HMI development and BSP development on various hardware platforms like ARM, Intel, Motorola, MIPS, Philips, Hitachi, Fujitsu and NEC. We have expertise in development and porting of device drivers such as USB, SCSI, Ethernet and display driver and engineering development for kernel, utilities and libraries. The division did the implementation of applications compatible with protocols and standards like DeviceNet, CAN, MOST, TCP/IP, SNMP, OSEK, SECS, HSMS, GEM, OSS, SEMI, OBEM etc. and protocol stack / abstraction layer development for compatibility of application across various RTOS. The division has also worked with porting of RTOS across various hardware platforms and application porting across various RTOSs.

In networking domain, the division has experience in the development of wireless applications based on 802.1X, wireless gateway development and layer-2/Layer-3 protocol implementation and test software development for networking equipment. In mobile computing, application software development and conversion for PocketPC., the division has developed web interface software for various devices and VoIP implementations.

8 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

On the Windows applications front, our key strengths are in chain, with services shifting gradually from the mechanized VC++, COM, ATL/STL, MFC, C# and UI development. We also production phase to both the pre-production and post-pro- had experience with kernel mode device drivers on Windows. duction stages. The studios are enhancing their skill base in or- In alignment with the Vista initiative at Microsoft, The division der to cater to end-to-end animation and gaming work. Cost started competency building on Vista compatibility testing savings remain a key driver for overseas companies looking services, device driver migration to Vista, application redesign to outsource animation and gaming development activities. for Vista and installer design for Vista. India has picked up considerable momentum in animation development vis-à-vis outsourced work as well as domestic Our development facilities in India are staffed with talented demand. Investors are finding Indian animation industry as a team that drives our success in the latest technology while viable option to invest into. continually breaking the boundaries of conventional processes. Our group includes some of the most ingenious designers, Business Model The primarily engagement models will be to software engineers, domain and documentation experts in work on outsourced content development and post produc- the field. Many of our software professionals graduated from tion services for Indian and overseas clients, to engage in co- leading technical universities in India. production with renowned production houses, to create own IPs for long term gains Animation Division (www.accelanimation.com) - Accel Ani- mation Studios (AAS) was set up in July 2006, as an incubated The studio has adopted creation of IPs as its primary engage- unit. The main lines of business include 3D Animation content ment model. IP, once created yields recurring revenues over a development, Visual Effects creation and Motion Capture Ser- long period of time, say 15 years, as animation contents can be vices AAS provides International quality digital media con- telecast or sold repeatedly over the years, as their shelf life is tent to its clients. Focused on consistent and seamless delivery longer. However, the IP creation is highly capital intensive and with emphasis on delivering on time, AAS offers end-to-end the revenues are expected to accrue only after a initial devel- services in animation, Motion Capture, VFX. Accel Animation opment period of 18 to 24 months. The studio has to invest Studios is poised to capture a large share of the quality-ori- continuously till the product is ready for release. The studio ented business in the animation space in India. Currently the has already released the first IP, “Indian Fables” for broadcast operations of AAS are being carried out in its studios situated and is currently developing another property, “Raju the Rick- in Chennai and Thiruvananthapuram Animation SEZ. shaw” for worldwide release, the details of these are given below. Animation Industry Overview The global animation market for animated content and related services (developer’s per- Indian Fables www. southindiafables.com spective) is estimated at USD 25-26 billion and is forecast to cross USD 34 billion by 2010. Of the total revenue earned in For the first time ever, and in 3D & HD Accel Animation Stu- the segment, approximately 40-45 percent is attributed to the dios has released “Indian Fables” based on the centuries old cost of development. Within animation, the entertainment Thirukkural in Tamil the famous collection of ancient cou- segment will continue to remain the major contributor, ac- plet as a 26 * 11 minutes episode, currently being telecast in counting for nearly three-fourth of the total market through Disney in India It is an universal text and has been translated the forecast period. into almost all languages of the world. Every episode tells a story with a moral that is applicable to the present and future The Indian Animation industry revenues are estimated at USD generations in this fast moving world. The values taught are 869 million by 2010, representing a CAGR of 25 percent over immense in today’s moving world teaching children to live an 2006-2010. The entertainment segment contributes nearly ethical life. The IP is fully owned by the company and is ex- 68 percent of the total animation market in India. Key factors pected to yield revenue across the globe over the next several driving this growth include Significant cost advantage, large years.. The company has appointed Monster Distributes of Ire- pool of English speaking manpower, growing maturity of ani- land as the global distributor for the property while retaining mation studios, development of IP, Attractive domestic market the India subcontinent rights with the company. This prop- opportunity Currently there are about 300 animation compa- erty is going to be launched formally during MIPCOM 2010, in nies, employing approximately 12,000 people in India. Further, Cannes, France during in October 2010. industry estimates indicate that nearly 3,000 freelancers also work in the industry. The industry’s dependence on exports is Raju the Rickshaw also reflected in a major proportion of the work force being involved in the outsourcing segment. However, looking forward, The studio has entered into an agreement with Kahani World the share of the domestic market is expected to grow. Indian Inc, an animation content development company based out companies have started focusing on the domestic market and of Canada for licensing the above IPR owned by them for 15 domestic demand for animated content has witnessed an years. This IP was earlier developed by the studio on a co-pro- upward trend over the past few years. Further, producers of duction agreement with Kahani World Inc. The studio, after an several Bollywood movies, have started using special effects assessment of the future potential for the IP, has decided to in their production. produce on its own, 78 episodes of 7 minute each and market worldwide. The company has appointed Paris based Cyber Even at these impressive growth forecasts the Indian Anima- group studios as the global distribution partner. This IPR is un- tion and Gaming industry will account for less than 2 per- der production and is expected to be delivered stating 2011. cent of the worldwide market in 2010, clearly indicating a significantly larger opportunity. Ensuring the availability of Major theatrical film project adequate, suitable manpower and a focused industry development program can help India achieve a larger share of the Under the outsourcing model, during the year the studio pie. Major competing destination for outsourced animation completed a project to produce a full length animated feature services are concentrated in the Asia Pacific Region includ- film for a movie production and distribution company with ing South Korea, China, Philippines, India, Singapore etc. The 2K/35MM resolution in 3D which was under production for animation studios in these countries are moving up the value the last two years. This is a major achievement showcasing our 9 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

abilities to produce international quality animation movies. ed to break even during the current year. The company wants The company expects to bag many such orders in the years to to treat the losses as investments in the technology develop- come. ment that will lead to large outsourcing orders in the years Human resource management to come. The companiy’s capability to produce international quality animation content has been appreciated by Holly- As on 31st March 2010, the company had employee strength wood studios and is expected to result in prestigious orders of 327. We have an established employee recruitment and during the current year. retention policy, which involves identifying right talents through recruitment training cum placement programme as Reserves and surpluses well as lateral recruitment and providing them with appropriate training and induction. During the year under review the company transferred Rs 8.45 million from the advance for issue of share warrants to Capital We ensure that all our employees receive technical and mana- Reserves since the applicants have not exercised the option gerial inputs regularly through various training programs. of converting into equity , and together with the balance at the beginning of the year, the General reserves stood at Rs Infrastructure 24.57 million including capital reserves of Rs 12.28 mn.. The company has not revalued any of its assets during the year . Our registered is located in Trivandrum and corporate office is located at Chennai. The Software division operates from Tech- Loan profile nopark in Trivandrum and occupies approximately 12,000 sqft and the animation division operates in fully equipped world As on March 31 2010, the company had a sanctioned working class studio from its Chennai facility in about 24000 sqft & capital facility of Rs. 278.10 million from company’s bankers, Trivandrum facility in about 18000 sqft. All the major offices out of which Rs. 243.10 million is fund based and Rs. 35.00 mil- and software development centres are well equipped with all lion is non-fund based facilities. The funds utilised and out- necessary infrastructure facilities. standing were Rs. 234.61 million including letters of credits utilized and accepted for payment. The total amount of per- Finance Accounts and Operational Controls formance bank guarantees issued by the bankers was Rs. 5.5 millions. The limits utilised includes Rs. 50 mn utilised for the The financial objective of the company is to bring in efficien- Systems & Services business which was sold but the Bank limit cies of operations at all levels so as to maximize return on capi- not transfered to the buyer. The limit has since been closed tal employed and to generate sufficient cash profits to fund as on 30th April, 2010, after receipt of sale consideration from on-going expansions and to meet the growth objectives. the buyer.

The audit committee and the Board periodically review per- Loans and advances formance parameters related to financial performance of the company to ensure smooth implementation of the internal The loans and advances were at Rs 540.90 mn as at the end for control systems and efficient management of the various re- the year under review. This includes an amount of Rs. 70.23 sources. The audit committee conducts periodic reviews with mn lying as security deposits offered for various leased prem- the management, internal auditor and the external auditor. ises taken by the company, an amount of Rs. 285 lacs being There is an on-going cost monitoring program to control vari- purchase consideration due and receivable for the transfer of ous expenses and the Board reviews the variance analysis. Systems & Services business and Rs. 22.81 mn of unbilled revenues as on March 31, 2010. The purchase consideration has Revenues since been received.

Consolidated revenues have been mentioned at the begin- Capital expenditure ning of this report. On a standalone basis, the company posted net revenues of Rs.182.86 million for the year ended March The capital expenditure incurred during the year was Rs.89.39 31, 2010, as compared to Rs.367.74 million for the year ended mn excluding a capital work in progress of Rs 23.50 mn. The March 31, 2009, The EBITDA for the year ended March 31, 2010 capital expenditure includes Rs 94.11 mn being the value of was Rs.38.97 mn as against Rs.14.87 mn for the previous year Intellectual property developed/ being developed by the ended March 31, 2009, During the year the company hived company off its Systems & Services division , which was incurring losses. The company reported a loss of Rs.16.50 million as against Depreciation and amortization Rs.44.31 million for the corresponding period last year, The company has been following straight-line basis of depre- Sales from geographies ciation and has depreciated assets based on the rates mentioned in the Companies Act 1956. The Digital Assets (Intan- During the year under review 36 % of the revenue was from gible) are amortized over the estimated life (revenue earning domestic operations and 64% of the revenue was from ser- potential) of such assets under written down value method vices exports. Investments Financial challenges 2009-10 During the year, the company sold 39% out of 49 % of the eq- The major challenges during the year was working capital uity share capital held by it, in Accel IT Resources Limited, an management. The company has been incurring losses due associate company for a consideration of Rs 46.80 million and to cash losses incurred in the animation division and the erst- the consideration was received in full in cash, to settle the lia- while Systems & Services division. The animation division was bilities and reduce the interest burden of the company. During in the investment phase during last three years and is expect- the year, the company sold of its entire stake in its Japanese subsidiary Accel Solutions Inc, Japan to the JV partner for a 10 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

consideration of Rs 0.07 million as the company was incurring field of animation and are expected to generate reasonable losses due to severe recession in Japan The company now revenues in the future. With a specific focus on the software operates in Japan through its US subsidiary. and animation the management is confident of seeing a steep Systems & services division growth of the divisions in the coming years.

During the year the company, pursuant to the approval of Cautionary Statement the members by way of a special resolution by postal ballot, transferred its Systems & Services Division carrying a Net As- Statements in the Management Discussion and Analysis set Book Value of Rs.788.30 Lacs as on April 1st 2009, to Accel describing the company’s objective. Projections estimates, Frontline Services Ltd with effect from 01.04.2009, on a slump expectation may be forward-looking statements within the sale basis for a total consideration of Rs 927.29 Lakhs. The meaning of applicable securities laws and regulations. Ac- profit on sale of the Systems & Services division representing tual results could differ materially from those expressed or the sale consideration over and above the net asset value ad- implied,. Important factors that could make a difference to justed in the books of accounts as on 01st April 2009 amount- the companies operations include economic conditions af- ing to Rs. 138.99 lacs (net of tax Rs.138.99 lacs) is credited to fecting demand/supply and price conditions in the domestic profit and loss account as ‘profit on transfer of Business’. and overseas market in which the company operates change in Government regulations, tax laws, interest costs, other stat- Interest outflow utes and other incidental factors.

The company incurred an expense of Rs.24.57 mn as Inter- Thus the company should and need not be held responsible, est and Financial charges. This included an amount of Rs 7.81 if which in not unlikely, the future turns out to be something mn towards interest on the term loan from company’s bank- quite different Subject to this management disclaimer, this ers Rs. 14.55 mn. towards interest for working capital facilities, discussion and analysis should be perused. Rs. 1.93 mn. towards interest on hypothecation term loan taken for the equipment leasing facility and Rs. 0.28 towards Annexure III the other financial charges like Bank charges, Bank Guarantee Report on Corporate Governance commissions, Letter of credit discounting charges etc. Your company has been practicing the principle of good cor-

Taxation porate governance, which comprises all activities that result in the control of the company in a regulated manner, aiming to During the year, we have not provided for any taxes on income achieve transparent, accountable and fair management. as the company incurred losses and also has carried forward

losses. The profits attributable to Software Technology Parks The details of corporate governance compliance by the com- of India (STPI) scheme expired on March 31, 2009 and hence pany as per clause 49 of the listing agreement with stock ex- is not available for the company during the current year. The change are as under: company has paid a tax of Rs..0.10 mn towards taxes for the US subsidiary. The company, as a matter of prudence, has not Company’s philosophy on corporate governance accounted deferred tax asset. The basic philosophy of corporate governance in the company Forex is to achieve business excellence and dedicate itself to increas-

ing long term shareholder value, keeping in view the needs We export services to foreign countries. During the year, we and interests of all its stakeholders. The company is commit- have made a net loss or Rs. 3.25 million due to foreign ex- ted to transparency in all its dealings and places emphasis on change fluctuations on the portion uncovered, due to unfore- business ethics. seen fluctuations in the US Dollar

Risk management Board of directors

We operate in highly competitive and fast changing market The board of the company is well structured with adequate environment. Our competition includes very large software blend of professional, executive and independent directors. services companies. We face challenges due to the fast changing technology and shortage of technically competent profes- The Board of Directors comprises of 4 Directors out of which sionals and the high attritions that are faced in the industry. 3 Directors are Non- Executive Directors. The Company has a In animation we have invested in technologies not available Non Executive Chairman and one half of Board of Directors are elsewhere in our country so that we can offer a bouquet of Independent Directors. The day to-day operations of the com- services for overseas customers. We believe that we have req- pany are carried out by the Divisional Heads and supervised by uisite management and HRD capabilities to recruit, train and the board of directors. deploy professionals on an ongoing basis in order to make available sufficient manpower. We believe that we have ad- None of the Directors on the company‘s Board is a member of equate checks and balances in place to identify and mitigate more than 10 committees and Chairman of more than 5 Com- risks associated with our business. mittees across all the companies in which he is a Director. All the Directors have made necessary disclosures regarding com- Room for optimism mittee positions occupied by them in other companies.

The Animation business is all set to take a centre stage in various spears not limiting itself to entertainment and gaming. We believe with the growing market and the ability to cater their needs are possible with the existing potential resources. The company is equipped with the latest technology in the 11 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Remuneration of Directors No stock options have been granted to any of the directors.

The details of remuneration paid to wholetime director Mr. Philip John during 2009 – 2010 are given below: The sitting fees paid to non-executive directors during the year as under: Particulars Amont in Rs.

Salary 6,00,000 Name of director Sitting fees

Allowances & Perquisites 9,000,00 Board Committee Remuneration & Contribution to Retiral Funds 9,360 meetings meetings compensation meetings Stock Option NIL Mr. M.R.Narayanan 45,000 12,500 2,500 Mr. Mohan Rao 45,000 12,500 2,500

Details of Remuneration / Sitting Fees paid to Directors Total 90,000 25,000 5,000

The Company does not pay any remuneration to any non- No sitting fees is being paid to Non executive Chairman, being executive directors. a promoter. Board Meeting

During the year under review, 5 board meetings were held on 25.05.2009, 27.07.2009, 28.08.2009, 31.10.2009 and 30.01.2010 and maximum interval between any two meeting was not more than 120 days.

The composition of the Board, attendance at Board Meetings (BM) held during the financial year under review and at the last Annual General Meeting (AGM) and number of Directorships and memberships/Chairmanships in public companies (including the company) are given below. No. of Directorship No. of board Committee position Attendance in Domestic Public meetings at- as on 31.03.2010 at the last Companies as on Name of Director Category tended out of 5 AGM held on 31.03.2010 meetings held 29.07.2009 (including this Member Chairman during 2009-10 company)

N.R. Panicker Non Executive Chairman, Promoter 5 Yes 07 01 1

M.R. Narayanan Non Executive, Independent 5 Yes 02 01 1

A.Mohan Rao Non Executive, Independent 5 Yes 02 02 1 Philip John Executive 5 Yes 01 Nil Nil

Board Procedure • Proposal for diversification, investment, disinvestments and restructuring and The Board is presented with extensive information on vital • Compliance of all laws applicable to the company in- matters affecting the working of the company and risk assess- cluding requirements of listing agreement with stock ex- ment and mitigation procedures. Among others, this includes: change.

• Operating plans, capital budgets and updates and reviews Attendance of last annual general meeting thereof. • Quarterly results of the company and its business seg- All Directors of the Company attended the last Annual Gen- ments. eral Meeting held on 27th July 2009. • Financial statements such as cash flow, inventories, sundry debtors and / or other liabilities of claims of substantial na- Postal Ballot ture. • Performance against operating plans. The company had obtained approval from shareholders by • Risks faced and steps taken to mitigate/minimize the risks. way of Postal Ballot, as detailed below. • Minutes of meeting of audit committee and other committees. Ordinary Resolution for transfer of Systems & Services Division • Details of any joint venture or collaboration agreement. to M/s. Accel Frontline Services Limited: • Development in the industrial and human relations front. • Important show cause, demand and penalty notices. Notice Date: 28th August 2009 • Materially relevant defaults in financial obligations to and Report Date: 12th October 2009. by the company or substantial non payment of goods sold by the company. Composition of committees of director and their attendance • Significant effluent or pollution problems. at the meetings. • Any issue which involves possible public or product liability claims of a substantial nature. The Board has constituted committees of Directors to take in- • Foreign exchange exposure and steps taken by manage- formed decisions in the best interest of the Company. These ment to limit the risks of adverse exchange rate move- committees monitor the activities falling within their scope of ment. reference. The Board’s committees are as follows. 12 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Audit committee All the audit committee meetings were usually attended by The audit committee has been mandated with the same terms the Chairman and members of the Committee, internal audi- of reference as specified in Clause 49 of the listing agreement tors and statutory auditors and the Divisional Heads. with Stock exchange and covers all the aspects stipulated by the SEBI Guidelines. The terms of reference also fully conform Remuneration and compensation committee to the requirements of Section 292A of the Companies Act, 1956. The remuneration and compensation committee of the company is empowered to review the remuneration of whole- Composition time directors including annual increment and commission after reviewing their performance. The Audit Committee of Directors comprises 2 independent directors and one non- executive Chairman of whom all have The Remuneration Policy followed by the company takes into relevant finance and audit exposure. consideration, the performance of the Wholetime Directors and Senior Executives, on certain parameters. The Remu- During the period under review, 4 audit committee meetings neration Committee comprises 3 Independent (including the were held on 25.05.2009, 27.07.2009, 28.08.2009, 31.10.2009 Chairman of the Committee) Non-Executive Directors. and 30.01.2010. During the year under review, One Remuneration Commit- The composition of the audit committee and their attendance tee meeting was held. The composition of the Remuneration at its meetings is given below. Committee is given below.

Name Composition No. of Meetings Name Composition No. of Meetings attended attended A. Mohan Rao Chairman 05 N.R. Panicker Chairman 01 N. R. Panicker Member 05 A. Mohan Rao Member 01 M. R. Narayanan Member 05 M. R. Narayanan Member 01

The scope of the Committee includes:- The company has complied with all the non-mandatory requirements under Clause 49 regarding the Remuneration a. Overseeing the company’s financial reporting process Committee. and the disclosure of its financial information, to ensure that the financial statements are correct, sufficient and credible; Information pursuant to Clause 49IV (G) of the Listing Agree- ment: b. Recommending the appointment/removal of external auditors, fixing audit fees and approving payments for any A brief resume and name of the companies in which Directors, other services; who are being re-appointed, hold Directorship / s Committee Memberships are given below: c. Approving fees for non-audit consulting/ services provided by the firms of statutory auditors; 1. Mr. N.R. Panicker - Chairman

d. Reviewing with the management the periodic financial Mr. N.R. Panicker is an IT professional with 34 years of expe- statements before submission to the Board, focusing primarily rience, he is the Founder and Chairman of Accel Limited, the on: main promoter of Accel Transmatic Ltd and also the Chairman • Any changes in accounting policies and practices; & Managing Director of Accel Frontline Limited a Joint venture • Qualifications in draft audit report; company of the group with BT Frontline Pte Ltd., Singapore, BT • Significant adjustments arising out of audit; Plc. Company • Compliance with accounting standards; • Compliance with Stock Exchange and legal require Mr. N.R. Panicker holds the following Directorships / Commit- ments concerning financial statements; tee Memberships. • Any related party transactions i.e. transactions of the company of material nature, with the promoters or the Mr. N.R. Panicker holds 10,33,904 equity shares of the com- management, their subsidiaries or relatives etc. that may pany. have a potential conflict with the interests of the company at large; Name of the Companies/firms Nature of interest 1. Accel Limited Promoter & Director e. Reviewing with the management, external and internal 2. Accel Frontline Limited Chairman and auditors, the adequacy of internal control systems and recom- Managing Director 3. Accel Tele.net Limited Director mending improvements to the management; 4. Accel IT Resources Limited Director 5. Accel Frontline Services Ltd. Director f. Discussing with internal auditor any significant findings 6. Kerala Venture Capital Fund (P) Limited Director 7. Accel Systems Group Inc., USA Director and follow-up thereon. 8. ACL Systems & Technologies Pte Ltd. Director Singapore g. Discussing with statutory auditors before the audit 9. Accel Frontline FZE, Dubai Director 10. Network Programs USA Inc., USA Director commences, the nature and scope of audit, as well as conduct 11. Network Programs Japan Inc., USA Director pos-audit discussions to ascertain any areas of concern; 12. Network Programs K K Japan Director 13. Accel Media Ventures Limited Director 13 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Committee Position : Accel Transmatic Limited

Audit Committee Member Remuneration Committee Chairman Mr. S.T. Prabhu, Company Secretary who is the Compliance Of- ficer can be contacted at: 2. Mr. A. Mohan Rao Mr. A. Mohan Rao is a veteran in the IT industry and 30 years of (a) For routine matters : experience in marketing and business management. Served Trivandrum as President and CEO of HCL Infosystems Ltd, before becom- T.C. 17 / 27 Tel. No.: (0471) 234 2215 / 234 2265 ing an independent consultant. Jagathy Fax No.: (0471) 234 2208 Trivandrum 695014 E-Mail:[email protected] Mr. A. Mohan Rao holds the following Directorships / Commit- tee Memberships. (b) For redressal of complaints and grievances : Chennai Third Floor, Tel. No. : (044) 4225 2200 Mr. A. Mohan Rao holds NIL equity shares of the company. Accel House Telefax. No. : (044) 2374 1271 75, Nelson Manickam Road E-Mail: [email protected] Name of the Companies/firms Nature of interest Aminjikarai, Chennai 600029.

1. Spatik Consultants Private Limited Director 2. Optimum Air Solutions Private Ltd Director The status of the total number of Investor complaints re- 3. Carl Bechem Lubricants (India) P Ltd Director dressed during the year is as follows: 4. MRO Tek Limited Director

Committee Position : Accel Transmatic Limited Received 13 Replied 13 Audit Committee Chairman Remuneration Committee Member

General body meeting

Location and time of general meetings

Year Type Date Venue Time 2002–03 AGM 30.09.2003 Lakshmi Chambers, III Floor, Vazhuthacaud, Trivandrum 12.30 pm 2003–04 EGM 09.07.2004 Salvation Army, Red Shield Guest House, Kowdiar, Trivandrum 11.00 am

2003–04 Court Convened 09.07.2004 Salvation Army, Red Shield Guest House, Kowdiar, Trivandrum 02 pm to 4 pm. General meeting

2003–04 AGM 14.03.2005 Lakshmi Chambers, II Floor, Vazhuthacaud, Trivandrum 11.30 am 2004–05 AGM 19.08.2005 USHUSTECH,311, Technopark, Trivandrum 02.00 pm 2005–06 AGM 15.09.2006 Conference Room, comfort Inn Grand, Statue, Thiruvananthpuram 02.00 pm

2006–07 AGM 24.09.2007 Malabar Hall, Park Centre, Technopark, Trivandrum 03.00 pm

2007–08 EGM 04.12.2007 Malabar Hall, Park Centre, Technopark, Trivandrum 03.00 pm 2008–09 AGM 27.07.2009 Malabar Hall, Park Centre, Technopark, Trivandrum 12.00 Noon 2009–10 Conference hall, Park Centre, KINFRA Film & Video Park, Kazhakootam, AGM 27.09.2010 11.00 am Trivandrum-695 585.

Compliance with mandatory requirements: Other Disclosures The company has complied with the mandatory requirements 1) The company has not entered into any materially signifi- of the Code of Corporate Governance as stipulated under cant transactions during the year, which could have a poten- clause 49 of the Listing Agreement with the Stock Exchange. tial conflict of interest between the company and its promot- The company has also complied with the requirements of ers, Directors, management and / of their relatives, etc other amended Clause 49 after it came into force. than the transactions entered into in the normal course of

business. Details of related party transactions entered into in the normal course of business are given in Notes on Accounts. Means of Communication

2) During the year under review, no penalties or strictures (i) Financial Results and Annual Reports etc : were imposed on the company by the stock exchange were the company’s shares are listed, SEBI or any statutory author- The quarterly unaudited financial results and the annual au- ity, on any matter relating to capital markets. dited financial results as approved and taken on record by the board of directors of the company are published during the year under review in leading national newspaper in english

14 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

and are also sent immediately to the stock exchange with 2. Financial calendar which the shares of the company are listed. These results are also placed on company‘s website. The company is not Financial Year : 01st April 2009 to 31st March 2010 in practice of sending half-yearly report to each household of shareholders. Results for the Quarter:

The company has its own website www.acceltransmatic.com 30th June End of July wherein official news release and other related information 30th September End of October are available. 31st December End of January 31st March End of April or end June Notices relating to annual general meetings and extraordi- (Audited figures) as per Stock nary general meetings, if any, are sent to the members at their Exchange guidelines registered address. 3. Book Closure Dates : 17th September 2010 to 27th (ii) Management discussion and analysis report : September 2010 (Both days inclusive) The Management Discussion and Analysis Report set out in Annexure II to the Directors report forms part of the annual 4. Listing of Shares report. The Shares of the Company are presently listed on Mumbai Non mandatory requirements Stock Exchange Ltd at Mumbai. The Annual Listing Fees have been paid to the Stock Exchange for Financial Year 2010 – Revised SEBI guidelines on corporate governance 2011.

SEBI had notified on October 29, 2004, a revised /updated set 5. Stock Market Codes of Guidelines relating to Corporate Governance which have been incorporated in the Company’s Listing Agreement with (i) Scrip Code : 517494 the Stock Exchanges. The compliance with the earlier Guide- (ii) Abbreviated Name : ACCEL TRANS lines where declared adequate up to March 31, 2005 (since (iii) Demat ISIN Number : INE258CO1020 extended up to December 31, 2005. The revised Guidelines came into effect from January 1, 2006.)

The Company is fully compliant with the revised SEBI Guide- lines.

As per the latest directive from Securities Exchange Board of India (SEBI), the transferor and the transferee have to provide documentary evidence of their PAN numbers to the effect the Share transfer.

Code of conduct

The Board of Directors has adopted the code of business conduct and ethics for Directors and Senior Management. The said code has been communicated to the Directors and Members of the Senior Management. The code has also been posted on the Company Web site www.acceltransmatic.com

Compliance certificate of the auditor

The statutory auditors have certified that the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the listing agreement with the stock exchange and the same is annexed to the Annual Report.

The certificate from the statutory auditors will be sent to the stock exchanges along with the annual report of the company.

General Shareholder Information

1.Annual General Meeting

Date and Time : September 27, 2010 at 11.00 am Venue : Conference hall, Park Centre, KINFRA Film & Video Park, Kazhakootam, Trivandrum-695 585

15 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

6. Share Holding Pattern as on 31st March, 2010

Number Total shareholding as a percentage of Shares Pledges or otherwise Category Number of Category of of total number of shares encumbered Code Total Number shares held in Shareholder Share of Shares dematerial- holders As a percentage As a percentage Number of As a ized form of (A+B)1 of (A+B+C) Shares percentage

(II) (IX) = (VIII)/ (I) (III) (IV) (V) (VI) (VII) (VIII) (IV) *100

(A) Shareholding of Promoter and Promoter Group2

(1) Indian

Individuals / Hindu (a) Undivided Family 2 1,133,719 1,133,719 10.27 10.27 - -

Central Government / (b) - - - - - State Government(s) -

(d) Financial Institutions/ Banks ------

Any Other (e) (Specify) Relatives of Promoters / 4 335,651 330,575 3.04 3.04 - - Subsidiary

Sub-Total (A)(1) 7 6,591,452 6,586,376 59.72 59.72 1,300,000 19.723

(2) Foreign -

Individuals(Non Resident (a) - - - - - Individuals)/Foreign Individuals

(b) Bodies Corporate - - - - -

(c ) Institutions - - - - -

(d) Any Other (Specify) - - - - -

Sub-Total (A)(2) - -

Total Shareholding of Promoter and Promoter Group 7 6,591,452 6,586,376 59.72 59.72 1,300,000 19.723 (A)= (A)(1)+((A)(2)

(B) Public Shareholding3 NA NA

(1) Institutions NA NA

(a) Mutual Funds / UTI 4 2,144 0.02 0.02

(b) Financial Institutions / Banks 4 520 400 - -

Central Government / (c ) - - - - - State Government(s)

(d) Venture Capital Funds - - - - -

(e) Insurance Companies - - - - -

(f) Foreign Institutional Investors - - - - -

(g) Foreign Venture Capital Investors - - - - -

(h) Any Other (Specify) - - - - -

Sub-Total (B)(1) 8 2,664 400 0.02 0.02

(2) Non-Institutions NA NA

(a) Bodies Corporate 118 211,420 207,300 1.92 1.92

(b) Individuals

i. Individual shareholders holding nominal share capital upto Rs.1 7,043 2,032,574 1,724,594 18.42 18.42 lakh.

ii. Individual shareholders holding nominal share capital 59 1,956,995 1,862,387 17.72 17.72 excess of Rs.1 lakh.

Any Other (Trust / Clearing (c ) 46 242,296 242,296 2.20 2.20 Member-details enclosed)

Sub-Total (B(2) 7,266 4,443,285 4,036,577 40.26 40.26

Total Public Share holding 7274 4,445,949 4,036,977 40.28 40.28 NA NA (B)=(B)(1)+(B)(2)

Total (A) + (B) 7281 11,037,401 10,623,353 100.00 100.00

Shares held by Cutodians and C against which Depository 0 - - NA - NA NA Receipts have been issued

GRAND TOTAL 7281 11,037,401 10,623,353 100.00 100.00 16 (A)+(B)+(C ) ACCEL TRANSMATIC LIMITED Annual Report 2009-10

7. Stock market data 8. Registrars & Transfer Agents (RTA)

M/S. Integrated Enterprises India Limited, Month & High Price Low Price Volume Kences Towers, 2Nd Floor, Year (Rs.) (Rs.) (Nos) No.1 Ramakrishna Street, North Usman Road Apr-09 13.85 9.54 85,196 T.Nagar, Chennai – 600017 May-09 16.96 10.15 268,189 Tel.: 044-2814 0801 – 803 Jun-09 21.30 14.10 412,086 Email: [email protected] Jul-09 16.55 12.50 67,155 Aug-09 14.31 11.78 98,136 Sep-09 13.75 11.42 133,013 Oct-09 13.73 11.17 71,859 Nov-09 13.50 10.30 47,853 Dec-09 14.55 11.50 142,017 Jan-10 16.59 12.55 218,179 Feb-10 15.01 11.50 114,084 Mar-10 18.00 11.77 346,779

Source: BSE India

9. Distribution of shareholding and categories of equity shareholders

March 31, 2010 March 31, 2009 No. of share % to share No. of % of total no. of share % to share % of total Category no. of shares holders holders shares equity holders holders equity 1 – 500 6464 88.78 679,669 6.15 6634 89.31 696,906 6.31 501 –1000 328 4.50 278,940 2.52 310 4.17 268,531 2.43 1001 – 2000 214 2.93 333,329 3.02 211 2.84 329,992 2.99 2001 – 3000 77 1.05 200,858 1.81 69 0.93 179,784 1.63

3001 – 4000 26 0.35 92,102 0.83 28 0.38 101,440 0.92 4001 – 5000 45 0.61 216,540 1.96 37 0.50 177,302 1.61 5001 – 10000 54 0.74 390,044 3.53 58 0.78 423,112 3.83 10000 & above 76 1.04 8,845,919 80.18 81 1.09 8,860,334 80.28 TOTAL 7284 100.00 11,037,401 100.00 7428 100.00 11,037,401 100.00

10. Statutory Compliance Nature of Queries Received Replied

During the year, the Company has complied with all appli- Non receipt of Certificate after transfer/ capital reduction 2 2 cable provisions, filed all returns / forms and furnished all rel- Non receipt of Annual Report evant particulars as required under the Companies act, 1956 Correction in Certificate 1 1 and allied Acts and Rules, the Securities and Exchange Board Non receipt of Inter/Dividend Warrant/ of India (SEBI) Regulations and the Listing Agreements with Cheque/DD 2 2 General queries 7 7 Stock Exchanges. Change of address / Bank Mandate 1 1 Procedure for loss of share certificate TOTAL 13 13 11. Share transfer system As at March 31, 2010, Nil investor complaints were pending. As Transfer of shares in physical form has been delegated by the at March 31, 2010, Nil share transfers and Nil demat requests Board to certain officials of the Registrars, to facilitate speedy were pending. service to the shareholders. Shares sent for transfer in physical form are registered by the Registrar and Share Transfer Agents Shares % to total Shares held in No. of held in within 30 days of receipt of the documents, if found in order. Category paid up dematerialized Shares Physical capital Form Shares under objection are returned within two weeks. All re- Form quests for dematerialization of shares are processed, if found Promoters 6,591,452 59.72 6,586,376 5,076 in order and confirmation is given to the respective deposi- Non - Promoters 4,445,949 40.28 4,036,977 408,972 tories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) within 15 days. Total 11,037,401 100.00 10,623,353 414,048

17 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

13. Dematerilisation of shares and liquidity 4. We state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or As on 31st March 2010, 96.249% of the company’s Equity effectiveness with which the Management has conducted Capital are held in dematerialized form with NSDL and CDSL. the affairs of the Company. Trading in equity shares of the Company is permitted only in dematerialized form, as per the notification issued by the Se- For Varma & Varma curities and Exchange Board of India (SEBI). Chartered Accountants F.R.N. 4532S 14. Investor correspondence Place : Chennai K.M. Sukumaran. F.C.A (a) For all routine correspondence regarding transfer and Date : May 27, 2010 Membership No.15707 transmission of shares, split, consolidation and issue of dupli- Partner. cate / renewed share certificates should be addressed to the Company ‘s Registrars and Share Transfer Agents at their following address. ANNEXURE – V

M/s. Integrated Enterprises India Limited, Certification by Chairman and Chief Financial Officer to the Kences Towers, 2nd Floor, board. No.1 Ramakrishna Street, North Usman Road Chennai – 600017 1. We have reviewed the financial statements for the year Tel: 044 28140801 / 802 /03 and that to the best of our knowledge and belief: Contact Person : Mr. Suresh Babu / Mr. Sriram (a) These statements do not contain any materially untrue (b) For complaints / grievances, if any, should be addressed statement or omit any material fact or contain statements to : that might be misleading;

The Company Secretary, (b) These statements give a true and fair view of the state of Accel Transmatic Limited, affairs of the company and of the results of operations and 17 / 27, Jagathy, cash flows. The financial statements have been Trivandrum – 695 014 prepared in conformity, in all material respects, with the Tel.: 0471 – 234 2215 / 234 2265 existing generally accepted accounting principles includ- Fax: 0471 – 234 2208 ing Accounting Standards, applicable laws and regula- Email: [email protected] tions.

15. Company Website 2. There are, to the best of our knowledge and belief, no transactions entered into by the company during the year For any further information on the Company, please visit Com- which are fraudulent, illegal or violative of the company’s pany’s website www.acceltransmatic.com. code of conduct.

ANNEXURE – IV 3. We accept overall responsibility for the company’s internal control system for financial reporting. This is monitored by Certificate of compliance from auditors as stipulated under the internal audit function, which encompasses the exami- clause 49 of the listing agreement of the stock exchanges in nation and evaluation of the adequacy and effectiveness. India. Internal audit works with all levels of management and statutory auditors, and reports significant issues to the Au- To dit Committee of the Board. The auditors and audit committee are appraised of any corrective action taken with The Members, regard to significant deficiencies and matrial weakness. Accel Transmatic Limited. 4. We indicate to the auditors and to the audit committee: 1. We have examined the compliance conditions of Corpo- rate Governance by Accel Transmatic Limited, Chennai for a) Significant changes in internal control over financial re- the period ended 31st March 2010 as stipulated in Clause porting during the year. 49 of the Listing Agreement of the said company with the Stock Exchanges. b) Significant changes in accounting policies during the year; 2. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination c) Instances of significant fraud of which we have become is limited to procedures and implementation there of, ad- aware of and which involve management or other em- opted by the company for ensuring the compliance of the ployees who have significant role in the company’s inter- conditions of the Corporate Governance. It is neither an nal control system over financial reporting. audit nor an expression of opinion on the financial statements of the Company. N R Panicker S T Prabhu 3. In our opinion and to the best of our information and ac- Chairman Company Secretary & cording to the explanations given to us, we certify that the Compliance Officer company has complied with the conditions of Corporate Place : Chennai Governance as stipulated in the above-mentioned Listing Date : May 27, 2010 Agreement.

18 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

ANNEXURE – VI Statement pursuant to section 212 of the Companies Act,1956 relating to company’s interest in subsidiary companies Directors responsibility statement Accel North Name of the Subsidiary Company Pursuant to the requirement of Section 217 (2AA) of the America, INC Companies Act, 1956, and based on the representations received from the operating management, your Directors 1 The financial year of the subsidiary Compa- nies ended on March 31, 2010 hereby confirm that: 2.A Number of shares held by Accel Transmatic (a) That in the preparation of the annual accounts for the year Limited with its nominees in the subsidiary 155000 ended March 31, 2010, the applicable accounting stan- at the end of the Financial year of the sub- 2.B sidiary company dards have been followed alongwith proper explanation relating to material departures. 2.C Extent of interest of holding company at 100% 3 the end of the financial year of the subsid- Paid up capital (b) That such accounting policies as mentioned in Note 21 of iary company $155000 the Notes to the Accounts have been selected and applied Face Value $1 consistently, and judgements and estimates have been made that are reasonable and prudent so as to give a true The net aggregate amount of the sub- and fair view of the state of affairs of the Company as at sidiary company Profit / (Loss) so far as 31st March 2010 and of the profit of the Company for the A. it concerns the members of the holding (I) company year ended on that date. Not dealt with in the holding company ‘s $50250 (c) That proper and sufficient care has been taken for the (ii) accounts For the Financial year ended 31st INR 2,399,139 maintenance of adequate accounting records in accor- March 2010 dance with the provisions of the Companies Act, 1956 for B. safeguarding the assets of the Company and for prevent- (I) For the previous financial years of the sub- ($66,333) ing and detecting fraud and other irregularities. sidiary INR (3,082,794) (ii) Dealt with in holding company’s accounts (d) The annual accounts have been prepared on going con- For the financial year ended 31st March 2009 NIL cern basis. For the previous financial years of the subsidiary companies since they became the NIL holding company ‘s subsidiaries

Annexure VII

Information as per Section 217 (2A) of the Companies Act, 1956 and the Companies

(Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2010.

Gross Net S. Age Designa- Experience Date of Previous Name Remuneration Remunera- Qualification No. (Years) tion (years) Joining Employment (Rs.) tion (Rs.)

1 Philip 56 Wholetime 15,09,360 11,84257 B.E., M.Tech 33 25.02.2004 Managing Director John Director - Ushus Technologies Private Limited

Note : 1. The Gross Remuneration shown above is subject to tax and comprises salary, allowances, monetary value of perquisites as per Income Tax Rules and Company ‘s contribution to Provident Fund and Professional Tax.

2. In addition to the above remuneration, Philip John is entitled to gratuity, medical benefits, etc in accordance with the Company‘s Rules.

3. The net remuneration is arrived at by deducting from the Gross Remuneration, Income Tax, Company ‘s contribution to Provdent Fund, Professional Tax and the monetary value of non-cash perquisites, wherever applicable.

19 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Auditors’ report

To, ii. in the case of the Profit and Loss Account, of the Loss for the The Members, year ended on that date; Accel Transmatic Limited. and iii. in the case of the cash flow statement, of the cash flows for 1. We have audited the attached Balance Sheet of Accel Trans- the year ended on that date. matic Limited as at 31st March 2010, the Profit and Loss Ac- count and the Cash Flow Statement for the year ended on For Varma & Varma that date annexed thereto. These financial statements are the Chartered Accountants responsibility of the company’s management. Our responsi- F.R.N. 4532S bility is to express an opinion on these financial statements based on our audit. Place: Chennai K.M. Sukumaran, F.C.A Date : May 27, 2010 M No: 15707 2. We conducted our audit in accordance with auditing stan- Partner dards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable as- Annexure referred to in paragraph 3 of our audit report of even date surance about whether the financial statements are free of material misstatement. An audit includes, examining on a test 1. a. The company is maintaining records showing full particulars, basis, evidence supporting the amounts and disclosures in including quantitative details of fixed assets. the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by b. The fixed assets of the company have been physically verified management as well as evaluating the overall financial state- by the management during the year, which, in our opinion is ment presentation. We believe that our audit provides a rea- reasonable having regard to the size of the company and the sonable basis for our opinion. nature of assets and no material discrepancies have been noticed on such verification. 3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by Companies (Auditor‘s Report) (Amendment) c. Except as stated in Note No. 21.8 of Schedule No. 21 regarding Order, 2004 issued by the Government of India in terms of sale of an undertaking, there has not been any other disposal Section 227 (4A) of the Companies Act, 1956, we give in the of any substantial portion of fixed assets of the company dur- Annexure a statement on the matters specified in Paragraphs ing the year, which would affect the status of the company as 4 and 5 of the said Order; a going concern.

4. Further to our comments in the Annexure referred to above, 2. The inventory of the Company at the year end consists of we report that: Digital Assets (Intangible Assets) only and hence the question of physical verification of inventory does not arise. Hence the (a) We have obtained all the information and explanations, which Paragraph 4(ii)(a), 4(ii)(b) & 4(ii)(c) of Companies (Auditor‘s Re- to the best of our knowledge and belief were necessary for port) (Amendment) Order is not commented upon by us. the purposes of our audit; 3. a. As explained to us, the Company has not advanced any (b) In our opinion, proper books of account as required by law amounts to Companies, Firms or other parties covered in the have been kept by the company so far as appears from our Register maintained under Section 301 of the Companies Act, examination of those books; 1956 except to the extent mentioned below.

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Number of Maximum amount Balance as on Statement dealt with by this report are in agreement with the Parties outstanding. (Rs) 31.03.2010 (Rs) books of account; 2 10,26,29,561/- 3,50,72,618/- (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with b. In our opinion , the rate of interest and other terms and condi- the Accounting Standards referred to in sub-section (3C) of tions on which the loan given to one of the above Compa- Section 211 of the Companies Act, 1956; nies listed in the register maintained under section 301 of the Companies Act, 1956 are not , prima facie, prejudicial to (e) On the basis of written representations received from the the interest of the company. In respect of the other party, the directors, and taken on record by the Board of Directors, we balance outstanding represents the balance of consideration report that none of the directors is disqualified as on 31st payable by them in sale of an undertaking to them as stated March 2010, from being appointed as a director in terms of in Note No. 21.8 in Schedule No. 21 for which no interest has clause (g) of sub-section (1) of Section 274 of the Companies been charged by the Company. Act, 1956; c. As per the information and explanations given to us, the (f) In our opinion and to the best of our information and accord- receipt of Principal and Interest thereon in respect of the ing to the explanations given to us, the said accounts read amount advanced to the parties as above is as agreed. with the notes on the accounts attached thereto, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2010;

20 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

d. The Company has taken unsecured loans from parties / com- 10. The company’s accumulated loss at the end of the financial panies in which Directors are interested covered in the register year is not more than fifty per cent of net worth of the com- maintained under Section 301 of the Companies Act, 1956. The pany. The company has not incurred cash loss during the year, number of parties and the amount involved are given below: but has incurred cash loss during the immediately preceding financial year. Number of Parties Maximum Amount Balance as on 11. As per the information and explanations furnished to us and outstanding 31.03.2010 our verification of records of the company, the company has 3 6,45,32,764/- 2,57,85,073/- made delays in repayment of dues to financial institutions or banks, and an amount of Rs. 1,28,50,000/- and Rs. 71,91,219/- of e. In respect of unsecured loans taken as above, in our opinion Principal and Interest respectively is over due as at the year and according to the information and explanation furnished to end. us, the rate of interest, where applicable, and other terms and conditions of loans are not prima facie prejudicial to the inter- 12. In our opinion and according to the information and explana- est of the company. tions given to us, and based on the documents and records produced to us, the company has not granted any loans or f. As per the information and explanations given to us, the pay- advances on the basis of security by way of pledge of shares, ment of principal amount and interest thereon is as stipulated. debentures and other securities

4. In our opinion and according to the information and explana- 13. In our opinion and according to the information and explanations given to us, the internal control system for the purchase of tions given to us, the nature of activities of the company does fixed assets and for the sale of services are generally commen- not attract any special statute applicable to chit fund and nidhi/ surate with the size of the company and nature of its business. mutual benefit fund/ societies. There are no major weaknesses in internal control of a continuing nature. 14. In our opinion, the company is not dealing or trading in shares, securities, debentures or other investments, and accordingly, 5. a. According to the information and explanations provided by the relative reporting requirements of the order are not appli- the management, we are of the opinion that the particulars of cable to the company. contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 15. According to the information and explanations given to us, the 1956 have been so entered. company has given a corporate guarantee to a bank on behalf of a company in which the Directors are interested for Rs.350 b. In our opinion and according to the information and expla- Lacs for availing loan from the banks by the said company, the nations given to us, the transactions made in pursuance to con- terms of conditions of which are not prima facie prejudicial tracts or arrangements entered in the register maintained un- to the interest of the company. As stated in Note No. 21.7 in der section 301 of the Companies Act, 1956 with the aforesaid Schedule No. 21 there are certain guarantees/ LCs given by the parties exceeding value of Rupees Five Lakhs in respect of each Banks on behalf of the erstwhile Systems and Services Division such party which have been entered into during the financial (which have been sold off w.e.f 01.04.2009 as stated in Note No. year are at prices which are reasonable having regard to the 21.8 in Schedule No. 21) pending transfer in the name of that prevailing market prices at the relevant time / at the values as Company as at the year end. We are informed that the relative agreed on the basis of Independent Valuation as stated in Note commission on such guarantees / LCs have been borne by that No. 21.8 in Schedule No. 21. Company.

6. In our opinion and according to the information and explana- 16. In our opinion and according to the information and explanation furnished to us, the company has complied with the direc- tions given to us, Term Loans availed during the year has been tions issued by the Reserve Bank of India and the provisions utilised for the purpose for which they have been availed. of Section 58A and 58AA and other relevant provisions of the Companies Act, 1956 with regard to the deposits accepted 17. According to the information and explanations given to us and from the public. on an overall verification of the attached balance sheet of the company, we report that the funds raised by the company on 7. The Internal audit of the company was conducted during the short-term basis have not been used to finance long-term as- year, by a firm of Chartered Accountants, the scope and cover- sets. age of which is commensurate with the size of the Company and nature of its business. 18. During the year, the company has not made any preferential allotment of shares to parties or companies covered in the reg- 8. As per the information and explanation furnished to us, Cost ister maintained under section 301 of the Companies Act. records u/s 209(1)(d) of the Companies Act, 1956 have not been prescribed in respect of the Services of the Company. 19. The company does not have any outstanding debentures as at the year-end. 9. a. There have been delays in depositing undisputed statutory dues including Provident fund, Employee’s State Insurance, In- 20. The company has not raised any money by way of public issues come Tax, Service Tax & Sales Tax with the appropriate authori- during the year. ties during the year. According to the information and explanations given to us, there are no undisputed amounts payable 21. According to the information and explanations given to us, no in respect of Income Tax, Wealth tax, Service tax, Sales tax, Ex- fraud on or by the company has been noticed or reported dur- cise duty, Customs Duty, Cess and other statutory dues which ing the course of our audit. were outstanding at the year end for a period of more than six months from the date they became payable, other than a sum For Varma & Varma of Rs. 5,35,175/- of Professional Tax and Rs. 5,47,600/- of Tax De- Chartered Accountants ducted at Source. F.R.N. 4532S

b. As per the information and explanation furnished to us, there Place: Chennai K.M. Sukumaran, F.C.A were no dues of sales-tax, income-tax, wealth-tax, service tax, Date : May 27, 2010 M No: 15707 excise duty, customs duty and cess which have not been depos- Partner ited on account of any dispute, as at the year end.

21 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Balance Sheet as at (All amounts are in Indian Rupees, unless otherwise stated)

Sch No. March 31, 2010 March 31, 2009

SOURCES OF FUNDS Shareholders’ funds

Share capital 1 110,374,010 110,374,010 Advance received against issue of share warrants - 8,415,000 Reserves and surplus 2 24,578,078 16,221,544 134,952,088 135,010,554 Loan funds Secured 3 225,315,073 225,065,057 Unsecured 4 35,085,073 70,994,202 260,400,146 296,059,259

Total liabilities 395,352,234 431,069,813 APPLICATION OF FUNDS Fixed assets Gross block 5 296,543,758 261,417,378 Less: Accumulated depreciation / amortization 87,305,247 100,802,469 Net block 209,238,511 160,614,909 Capital work in progress 23,506,628 10,502,983 232,745,139 171,117,892 Investments 6 12,466,543 37,025,465 Current Assets, Loans and Advances Inventories 7 4,047,005 100,745,388 Sundry debtors 8 57,949,098 122,696,774 Cash and bank balances 9 5,544,104 4,315,274 Other current assets 10 22,955,829 16,459,373 Loans and advances 11 54,090,634 41,032,576 144,586,670 285,249,385 Less: Current liabilities and provisions Current liabilities 12 43,529,334 91,559,770 Provisions 13 5,416,208 8,745,956 48,945,542 100,305,726 Net current assets 95,641,128 184,943,659 Profit and loss account 14 54,499,424 37,982,797 Total assets 395,352,234 431,069,813

Significant accounting policies and notes attached to accounts 21 Vide our report of even date

For and on behalf of the Board of Directors

M/s Varma & Varma N.R. Panicker A. Mohan Rao Firm Registration No. 4532S Chairman Director Chartered Accountants

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary

Place : Chennai Dated 27th May 2010

22 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Profit and loss account for the year ended (All amounts are in Indian Rupees, unless otherwise stated) Sch March 31, 2010 March 31, 2009 No. Income Income from operations 15 141, 547,448 372,044,663 Less: Excise duty - 12,642,830 Net income from operations 141,547,448 359,401,833 Other income 16 4,809,756 8,344,222 Profit on sale of investments / business (Net) 16-A 36,505,390 - 182,862,594 367,746,055 Expenditure Materials consumed 17 - 56,879,596 ( Increase ) / decrease in stock 17-A (473,554) (20,882,240) Cost of sales ( Traded goods / services) 17-B 853,155 57,708,217 Employee costs and benefits 18 86,958,420 160,918,205 Operating expenses 19 56,553,254 98,251,682 143,891,275 352,875,460 Profit before depreciation, interest and tax 38,971,319 14,870,595 Interest & finance costs 20 24,572,459 34,940,595 Depreciation 5 28,652,631 25,035,929 Profit / ( Loss ) before tax (14,253,769) (45,105,929) Less: Taxation for the Year - Current tax 732,473 - - Fringe benefit Tax - 1,529,612 - Deferred tax - (2,352,843) - Income tax of earlier years 1,530,385 - Profit / ( Loss ) for the year after tax available for Appropriation (16,516,627) (44,282,698) Less: Appropriation Proposed dividends - On preference shares - 31,068 Tax on dividend - 5,282 Balance of profit / (Loss) carried to balance sheet (16,516,627) (44,319,048) Basic earnings per share (1.50) (4.02) Basic earning per share excluding extra ordinary item (4.80) (4.02) Diluted earnings per share (1.50) (3.92) Diluted earnings per share excluding extra ordinary item (4.80) (3.92)

Significant accounting policies and notes attached to accounts 21 Vide our report of Even Date

For and on behalf of the Board of Directors

M/s Varma & Varma N.R. Panicker A. Mohan Rao Firm Registration No. 4532S Chairman Director Chartered Accountants

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary

Place : Chennai Dated 27th May 2010

23 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Cash flow statement for the year ended (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009 Amount Amount A Cash flowfrom operating activities profit before taxation from operations (14,253,769) (45,105,928) adjustments for: depreciation 28,652,631 25,035,929 profit on sale of assets (13,899,963) profit on sale of investments (22,605,427) - interest – net 24,264,825 34,209,435 dividends received (3,880) (5,703) operating profit/[loss] before working capital adjustment 2,154,417 14,133,734 adjustments for: sundry debtors 64,747,675 (3,177,596) inventories 96,698,383 (37,688,135) loans and advances (19,554,514) 15,823,069 payment of dividends - (331,190) trade payables (51,360,181) 17,388,244 cash generated from operations 92,685,780 6,148,126 income tax paid 2,262,858 1,529,612 net cash flow from operating activites 90,422,922 4,618,514 B Cash flow from investing activities sale / (purchase) of fixed assets - net (76,438,384) (58,986,495) purchase / sale of investments 47,164,351 (1,092,870) interest received 307,633 731,160 dividends received 3,880 5,703 net cash flow from investing activities (28,962,520) (59,342,502) C Cash flow from financing activities increase in share capital ( share application ) - (2,100,000) proceeds from / (repayment of) long term borrowings (34,473,956) 70,090,483 net increase of cash credit and other short term borrowings (1,185,156) 19,254,727 interest paid (24,572,459) (34,940,595) net cash flow from financing activities (60,231,571) 52,304,615 net increase in cash/cash equivalents 1,228,831 (2,419,374) D Cash and cash equivalents opening cash and cash equivalents 4,315,273 6,734,647 closing cash and cash equivalents 5,544,104 4,315,273 Notes: 1. Cash and cash equivalents include cash in hand & remittances in transit, balance with banks on current accounts and deposit ac counts. 2. The above cashflow statement has been prepared under the “Indirect Method” as set out in the accounting standard on cash flow statement [AS-3] issued by the Institute of Chartered Accountants of India. 3. Previous year figures have been rearranged/regrouped wherever necessary. 4. This is the cashflow statement referred to in our report of even date.

Significant accounting policies and notes attached to accounts 21 Vide our report of Even Date

M/s Varma & Varma For and on behalf of the Board of Directors Firm Registration No. 4532S Chartered Accountants N.R. Panicker A. Mohan Rao Chairman Director

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary Place : Chennai Dated 27th May 2010 24 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the financial statements as at (All amounts are in Indian Rupees, unless otherwise stated)

March 31, 2010 March 31, 2009

1 Share capital Authorised 19,750,000 ( 19,750,000) Equity shares of Rs.10/- each 197,500,000 197,500,000 250,000 ( 250,000 )12% cumulative redeemable Preference shares of Rs. 10/- each 2,500,000 2,500,000

200,000,000 200,000,000

Issued, Subscribed and Paidup : 11,037,401 ( 11,037,401 ) Equity shares of Rs.10/- each fully paid up 110,374,010 110,374,010

110,374,010 110,374,010

2 Reserves and surplus Capital Reserve Opening balance 1,782,500 1,782,500 Add: Share application money forfeited (See Note no.21.5) 8,415,000 -

10,197,500 1,782,500 Revaluation reserve 12,339,044 12,397,510 Less: depreciation on revaluation 58,466 58,466

12,280,578 12,339,044 Capital Redemption Reserve 2,100,000 2,100,000 24,578,078 16,221,544

3 Secured loans From a Bank - Cash credit (See note : 21.6) 112,069,999 113,255,155 - Term loan 106,727,113 95,620,479 Hire purchase loans 6,517,961 16,189,423 225,315,073 225,065,057

4 Un Secured loans Public deposits 9,450,000 9,800,000 Inter corporate loans 25,635,073 61,194,202

35,085,073 70,994,202

25 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

------

(17) 9,083 As on As 67,633 21,141 (26,348) (10,660) (161,024) (899,833) 1,503,561 2,769,501 4,410,545 7,032,973 1,150,998 2,260,545 61,115,164 (2,928,434) 12,280,000 23,147,676 18,804,522 14,050,881 11,990,711 (4,602,686) (7,639,093) (6,888,200) (8,290,605) (1,086,781) (2,612,063) (1,256,393) 31.03.2009 123,324,857 160,614,909 (12,280,000) (20,162,966) (11,639,434) (42,840,337)

------17 (17) As on As (9,083) (67,633) (21,141) 6,760,479 1,864,030 3,934,194 4,218,404 4,784,418 Net Block Net 69,779,264 12,280,000 50,974,152 17,942,960 12,823,296 12,061,581 11,815,950 (3,089,020) (4,410,545) (7,032,973) (1,150,992) (2,260,545) (1,503,561) 31.03.2010

160,614,909 209,238,511 (12,280,000) (18,804,522) (23,147,676) (14,050,881) (11,990,711) (61,115,164)

------Upto Upto 822,070 232,674 150,290 (278,38) (40,678) (956,000) (349,901) 31.03.2010 1,924,136 1,928,276 8,866,366 1,252,270 3,969,511 1,600,468 9,486,925 6,216,981

87,305,247 40,821,178 10,034,101 (2,769,501) (2,468,317) (3,943,535) (1,736,135) (2,449,674) (1,462,198) (1,203,953) (6,216,981) (1,231,079)

100,802,469 (21,002,325) (10,869,321) (44,832,101)

------64,794 40,678 956,000 (52,494) 118,553 278,380 650,451 117,227 (66,059)

4,800,204 1,771,510 1,080,789

1,462,198 42,208,320 16,944,438 14,041,651 (1,761,889) Disposals/ Adjustments Adjustments

------Year Year

(5,207) (1,577)

For the For 162,247 192,141 574,105 396,515 822,070 (88,751)

(192,141) (200,276) (249,551) (351,518) (899,850) (384,930) 5,608,184 4,808,479 3,964,984 2,151,645 28,711,098 25,094,395 10,030,728 (3,639,162) (2,672,490) (2,700,900) (1,081,935) (12,467,174) Depreciation Depreciation

- - - - -

Upto Upto 40,678 278,380 956,000 349,901 (66,059) (78,104) (39,101) 1,203,953 (158,933) (867,249) (344,694) (852,435) 1,462,198 1,761,889 1,736,135 2,449,675 6,216,981 3,943,535 1,231,079 2,468,317 75,826,627 21,002,325 44,832,101 10,869,321 (7,230,160) (1,271,045) (1,543,994) (1,386,382) (1,212,647) (5,317,131) (1,231,079) (2,064,745) 01.04.2009 100,802,469 (18,353,919) (32,364,927)

------

232,674 150,290 (49,761) (346,013) (371,042) 6,760,479 5,858,330 6,146,680 2,459,561 6,035,687 3,464,498 6,216,964 70,601,334 21,302,877 12,280,000 21,689,662 91,795,330 27,976,860 16,031,093 (1,602,956) (6,146,680) (2,613,190) (3,464,498) (6,216,964) (1,231,079) (9,482,648) Total as on Total 31.03.2010 296,543,758 261,417,378 (34,016,997) (15,934,246) (12,280,000) (39,806,846) (16,519,198) (105,947,264)

------

Sale / 64,794 49,761 346,013 227,083 138,368 Transfer Transfer 1,080,789 (227,083) 2,613,190 2,459,561 3,597,898 1,105,276 54,272,866 21,319,781 14,772,968 (4,531,390) (6,724,467)

------

621,034 684,330 151,937 617,171 (267,909) 6,760,479 1,326,940 (335,919) (529,703) (313,762) 3,202,597 5,433,425 89,399,247 70,601,334 62,492,977 (6,623,871) (3,023,767) (6,842,211) Additions/ Additions/ (13,813,834) (30,742,001)

Adjustments Adjustments Gross Block Stated at Cost at Block Stated Gross

- - - -

49,761 346,013 371,042 (78,104) (49,761) (227,083) (371,042) 4,531,390 6,146,680 2,459,561 9,482,648 2,613,190 3,464,498 6,216,964 1,231,079

Cost as on Cost 12,280,000 39,806,846 34,016,997 16,519,198 15,934,246 (6,146,680) (2,123,642) (8,952,946) (9,676,987) (2,299,428) (3,464,498) (6,216,964) (1,231,079) 01.04.2009 261,417,378 199,151,484 105,947,264 (12,280,000) (25,993,012) (75,205,264) (27,393,126) (12,910,479)

TAL TAL Particulars Land 1 ) Building (note: Factory Hold Building(Kinfra) Lease Building Modification and Machinery Plant Machines3) (note Processing Data Software Computer and Fixtures Furnitures Equipments Testing Office Equipments Electrical Fittings Library Books Supply System Water Development Prototype Vehicle IPR - Indian Fables Intagibles Goodwill Software Lisences Partitions Temporary TO Year Previous . . Sl No as at Statements partSchedule forming of Financial unless otherwise stated) in Indian Rupees, are amounts (All Assets 5 Fixed 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Note: Reserve. with Revaluation is being adjusted of Rs.58,466/- of Revaluation on account Depreciation The 1. figures year Previous in brackets represents Figures 2. Rs.38,36,688 (credit) Includes prior period in depreciation adjustments 3.

26 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedule forming part of the financial statements as at (All amounts are in Indian Rupees, unless otherwise stated)

March 31, 2010 March 31, 2009

6 Investments -- Long Term

Unquoted (Trade) at cost

In Subsidiaries

Accel Solutions Japan Inc * - 1,158,923 [ Nil (60) Shares of Y 50,000 Each ]

Accel North America Inc, California 6,416,147 6,416,147 [155,000 (155,000) Shares of USD 1 Each ]

Others

Accel IT Resources Limited ** 6,000,000 29,400,000 [100000 (490000) Equity shares of Rs.10/- each fully paid up ]

Quoted [Non-Trade] at cost

Rajashree Sugars and Chemicals Ltd 1,575 1,575 [65 (65) Equity shares of Rs.10/- each fully paid up]

State Bank of India 20,900 20,900 [60 ( 60) Equity shares of Rs.10/- each fully paid up ]

ICICI Bank Limited 25,756 25,756 [125 (125) Equity shares of Rs.10/- each fully paid up ]

Pittsburgh Iron and Steels Ltd ( Formerly S & Y Mills Limited) 2,165 2,165 [500 (500) Equity shares of Rs.10/- each fully paid up]

[Aggregate market value of quoted shares as on the date of Balance Sheet is Rs.251,538/- (Previous year Rs.111,559/-)]

12,466,543 37,025,465

7 Inventories *** Raw Materials - Components - 23,458,562 - stores & spares - 12,502,763 Finished goods / semi finished goods - 14,468,382 Work in progress 4,047,005 50,315,681

4,047,005 100,745,388 8 Sundry debtors Unsecured considered good Debts exceeding six months 14,870,393 40,494,307 Other debts 43,078,705 82,202,467 57,949,098 122,696,774

9 Cash and bank balances Cash in hand and remittances in transit (Including Cheques in Hand) 4,760 89,560 Balances with scheduled banks: in current accounts 1,400,160 457,782 in deposit accounts 3,968,159 3,595,825 Unclaimed dividend accounts 171,025 172,107

5,544,104 4,315,274

* refer note 21.8(c) ** refer note 21.8(b) *** refer note 21.8(a)

27 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the financial statements as at (All amounts are in Indian Rupees, unless otherwise stated)

March 31, 2010 March 31, 2009

10 Other Current Assets Accrued Interest / Income 142,198 738,703 Unbilled Revenue 22,813,631 15,720,670 22,955,829 16,459,373 11 Loans and advances (Unsecured, considered good) Advances recoverable in cash or in kind or for value to be received 40,783,095 17,139,454 Deposits 8,996,745 18,917,234 Advance income tax / tax deducted at source 4,310,794 4,975,888 54,090,634 41,032,576 12 Current liabilities Sundry creditors for goods supplied Due to micro ,small & medium enterprises ( see note no.21.10 ) - - Due to others 17,211,726 47,158,537 Creditors for expenses 20,774,532 30,694,727 Other liabilities 3,926,557 7,185,557 Advances received from customers for supply of goods & services 1,445,494 6,348,842 Unclaimed dividend * 171,025 172,107

43,529,334 91,559,770 13 Provisions for Fringe Benefit Tax (net of advance tax) - 420,958 Employee benefits 5,416,208 8,069,585 Warranty - 255,413 5,416,208 8,745,956 14 Profit & loss account Opening balance 37,982,797 (6,336,251) Transfer of loss from profit & loss account 16,516,627 44,319,048

54,499,424 37,982,797

* To be transferred to Investor Education & Protection Fund in the respective years if remaining Unpaid

28 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the financial statements for the year ended (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009 15 Income from operations Sales income Manufacturing sales - 102,165,355 Trading sales - 77,150,442 Less: vat & sales tax - 10,630,899 - 168,684,900 Service income Maintenance and repair services (net) - 30,361,923 Software services: Domestic 23,771,411 - Exports 117,776,037 172,997,840 141,547,448 203,359,763 141,547,448 372,044,663 16 Other income Interest income ( tds: Rs. 55,825 ( Rs.129,942 ) ) 307,634 731,160 Liabilities no longer payable written back 1,361,275 2,956,203 Rent received 756,200 - Guarantee commission received 274,000 210,196 Royalty income 2,106,767 - Miscellaneous income 3,880 5,703 Foreign exchange variation - 4,440,960

4,809,756 8,344,222 16-A profit on sale of investments / business (net) Profit on sale of investments 23,400,000 - Less: loss onsale of investments 794,573 - 22,605,427 - Profit on transfer of systems & services division 13,899,963 - 36,505,390 -

17 Materials consumed Opening stock of materials 23,458,562 17,503,820 Less: stock of systems & services division tranferred 23,458,562 - Add: purchases - 65,981,866 - 83,485,686 Closing stock of materials - (23,458,562) Less : obsolete inventory written off - 3,147,528 Material consumed - 56,879,596

17-A : (Increase ) /decrease in stock Closing stock 4,047,005 47,885,372 Less: opening stock Opening balance 47,885,372 27,003,132 Less: stock of systems & services division transferred 2,046,548 - Less: transferred to capital work in progress 42,265,374 - 3,573,450 27,03,132 (Increase) / decrease in stock (473,554) (20,882,240)

17-B : Cost of sales ( traded goods / services) Opening stock 24,924,597 15,750,301 Less: stock of systems & services division transferred 24,924,597 - Purchases 853,155 66,882,513 853,155 82,632,814 Closing stock of materials - (24,924,597) Cost of sales (traded goods / services) 853,155 57,708,217

29 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the financial statements for the year ended (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009 18 Employee costs and benefits Salaries allowances and bonus 76,405,931 146,606,043 Contribution to welfare funds 5,685,766 9,013,815 Staff welfare expenses 4,866,723 5,298,347 86,958,420 160,918,205 19 Operating expenses Rent 11,030,472 19,576,876 Rates & taxes 837,618 92,591 Electricity charges 6,630,977 6,385,820 Repairs and maintenance - Plant & machinery 790,353 200,285 - Buildings 815,580 657,991 - Others 2,178,488 4,410,839 Printing and stationery 445,317 1,786,073 Communication costs 4,746,055 8,152,569 Travelling and conveyance 12,541,602 26,536,175 Insurance 2,147,702 2,695,126 General expenses 5,192,125 12,909,381 Foreign exchange variation 3,257,190 - Advertisement expenses 689,672 1,473,411 Sales promotion expenses 4,614,583 3,279,645 Warranty provision - 255,413 Bad debts written off 510,445 5,989,883 Packing and forwarding expenses 125,075 3,849,604 56,553,254 98,251,682 20 Interest & finance costs - On fixed loans 14,551,297 14,507,542 - Other loans 9,745,142 18,877,395 Bank charges 276,020 1,555,658 24,572,459 34,940,595

30 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

SCHEDULES TO AND FORMING PART OF FINANCIAL STATEMENTS of the premises. Digital Assets (Intangible) are amortized over (CONTINUED) the estimated life (revenue earning potential) of such assets (All amounts are in indian Rupess, unless otherwise stated) under written down value method.

(d) Borrowing costs 21.0 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Borrowing costs that are attributable to the acquisition or con- (a) Basis of preparation of financial statements struction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to rev- The financial statements have been prepared to comply in all enue, during the period in which they are incurred. material respects with the Accounting Standards notified under Companies (Accounting Standards) Rules 2006 and the (e) Intangible assets relevant provisions of the Companies Act, 1956. The Financial Statements have been prepared under the historical cost con- (i) Intangible assets in the nature of software licenses are stated vention on accrual basis. The Accounting policies have been at cost and are amortized over the estimated useful life of consistently applied by the company and except as disclosed, one to five years, using straight line method as technically are consistent with those used during the previous year. assessed. Goodwill included under fixed assets, is amortized over a period of 5 years. (b) Use of Estimates (ii) Intangible assets in the nature of Digital Assets (Animation The preparation of financial statements in conformity with Contents) is capitalized as and when it is completed and generally accepted accounting principles requires esti- ready for commercialization and amortized over a period of mates and assumptions to be made that affect the reported revenue earning potential as estimated by the management. amounts of assets and liabilities of the financial statements Cost of own / co production of Animation products and not and the reported amounts of revenues and expenses during ready for commercialization as at the year end is carried for- the reporting period. Differences between actual results and ward as capital work in progress in the Balance sheet as at the estimates are recognized in the period in which the results are yearend, if the management is convinced of the commercial known / materialized. viability of the same. Development expenses of animation products that are not considered to be commercially viable is (c) Fixed Assets , depreciation and amortization expensed.

(i) Fixed assets (f) Investments Fixed assets are stated at cost or at replacement cost, in case of Investments that are readily realizable and intended to be revaluation, less accumulated depreciation and impairment, if held for not more than a year, if any are classified as current any, in the value of the assets. Cost of Fixed Assets includes investments. All other investments are classified as long term all incidental expenses and interest cost on borrowings where investments. Current investments are carried at lower of cost applicable, attributable to the acquisition of assets, up to the and fair value determined on an individual investment basis. date of commissioning of the assets. Long term investments are carried at cost. Provision is made where there is a fall in value of such long-term investments, (ii) Leased assets which are other than temporary in nature. Investments outside India in subsidiary companies are carried in the Balance Fixed Assets acquired on Finance lease have been capitalized Sheet at historical cost. at lower of present value of minimum lease payments or fair value. These assets have been depreciated over the useful life (g) Cash flow statement of the asset as technically ascertained by the company. Cash flows from operating activities are reported using the (iii) Impairment of assets indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any de- The carrying amounts of Fixed Assets of the cash generating ferrals or accruals of past or future cash receipts or payments. units of the company are reviewed at the Balance Sheet date The cash flows from regular revenue generating, investing to assess whether they are recorded in excess of their recov- and financing activities of the company are segregated. erable amounts, and where the carrying values exceeds the estimated recoverable amount, the assets are written down to (h) Inventories their recoverable amount. Cost of production representing overheads incurred for Ani- (iv) Depreciation / amortization mation contract services is carried over as work in progress in the Balance Sheet as at the year end. Depreciation on fixed assets is provided for from the date the asset is ready to be put to use, under straight-line method in (i) Revenue recognition the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. The rates of depreciation and amortiza- (i) Sale of products tion are as follows: Sales (net of returns) are reported exclusive of sales tax ,octroi, Asset Rate of depn / Amortization (%) all other taxes, duties, rebates and discounts. Sales are recognized when significant risks and rewards of ownership are Plant and machinery 4.75 passed on to the buyer, which generally coincides with deliv- Office equipment 4.75 ery of goods. Furniture and fixtures 6.33 (ii) Income from service Computer hardware 16.21 Income from Services is recognized on accrual basis, as follows Computer software 20.00 and are exclusive of service tax. Vehicles 9.50 (iii) Annual maintenance contracts Lease hold improvements Over the lower of estimated useful lives of the assets or the primary Income from Annual maintenance contracts is recognized period of the lease. proportionately over the period of the respective contracts.

Fixed assets individually costing Rs 5,000 or less are fully (iv) Software services depreciated on purchase during the relevant year. Assets installed in leased premises are amortized over the lease period Software services are either provided on a time & material ba-

31 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) iii. Exchange differences – Exchange differences arising on the settlement or conversion of monetary items are recog- sis or on a fixed price basis. IT Services provided on a time & nized as income or as expenses in the period in which they material basis are recognized in / for the period in which the arise. services are performed. IT Services provided on a fixed price basis are recognized based on the milestones as specified in (m) Earnings per share the contracts. Unbilled revenue included under Other Current Assets represents amount recognized based on services per- The number of shares used in computing basic earnings per formed in advance of billing in accordance with contractual share is the weighted average number of shares outstand- terms. ing during the year. The number of shares used in computing diluted earnings per share comprises the weighted average (v) Animation services shares considered for deriving basic earnings per share and also the weighted average number of shares, if any, which In respect of Animation services for third parties, income is would have been issued on the conversion of all dilutive po- recognized based on milestone achieved as specified in the tential equity shares. contracts. In case of own production of Animated content income is recognized on sale / licensing of such products. Share (n) Segment accounting of surplus from co production ventures is recognized as and when the same accrues after recoupment of the production 1. Segment accounting policies cost in full as per the terms of the agreement. Segment accounting policies are in line with the accounting (j) Employee benefits policies of the Company. However, the following specific accounting policies have been followed for segment reporting: i) Defined contribution plan: i. Segment Revenue includes Sales, Service and other in- Provident Fund / Employee State Insurance Scheme come directly identifiable with / allocable to the segment including inter-segment revenue. Contribution to Provident Fund Scheme and Employee State Insurance Scheme are charged to Profit and Loss Account ii. Expenses that are directly identifiable with / allocable to in the year of contribution. There are no other obligations segments are considered for determining the Segment Result. other than such contribution payable to the respective fund The expenses, which relate to the company as a whole and not / scheme. allocable to segments, are included under “Other Unallocable expenditure”. ii) Defined benefit plan: iii. Income, which relates to the Company, as a whole and not Gratuity allocable to segments is included in “Unallocable Corporate Income”. Gratuity has been covered under Group Gratuity cum Assur- ance Scheme of Life Insurance Corporation of India. Accrued iv. Segment result includes margins on inter-segment capital Liability for gratuity as at the Balance Sheet date is ascertained jobs, which are reduced in arriving at the profit before tax of on actuarial basis using projected unit credit method and bal- the company. ance in excess of fair value of the plan Assets as at the yearend is duly provided for. v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate iii) Compensated absences assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any seg- Short term compensated absences are provided for based on ment. Unallocable assets mainly comprise of investments in estimates at gross undiscounted values. Long term compen- Subsidiaries and Others. Unallocable liabilities include provi- sated absences are provided for based on actuarial valuation. sions for employee retirement benefits & Taxation.

(k) Taxes on income 2. Inter Segment Transfer Pricing Segment Revenue resulting from transactions with other Provision for current tax is made based on the liability com- business segments is accounted on the basis of transfer price puted in accordance with the relevant tax rates and tax laws. agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negoti- Deferred Tax is recognized on timing differences between the ated basis. accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substan- (o) Accounting for provisions, contingent liabilities & contingent tively enacted as on the Balance Sheet date. In respect of un- assets dertakings the income of which is exempt under section 10B of the Income Tax Act, 1961, Deferred Tax liability on account A provision is recognized where the enterprise has a present of timing differences arising but getting reversed during the obligation as a result of past event and is probable that an tax holiday period has not been recognized. outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions Deferred Tax assets are recognized and carried forward to are not discounted to its present value and are determined the extent that there is a virtual certainty as the case may be based on management estimate required to settle the obli- that sufficient future taxable income will be available against gation at the Balance Sheet date. These are reviewed at each which such deferred tax assets can be realized. Balance Sheet date and adjusted to reflect the correct Man- agement estimates. (l) Foreign currency transactions Contingent Liabilities are disclosed by way of notes to the i. Initial recognition – foreign currency transactions are re- Balance Sheet. Provision is made in the accounts in respect of corded in the reporting currency, by applying to the foreign those liabilities which are likely to materialize after the year- currency amount the exchange rate between the reporting end, till the finalization of accounts and have material effect currency and the foreign currency approximately at the date on the position stated in the Balance sheet. of the transaction. Contingent Assets are not recognized in the financial state- ii. Conversion – Foreign currency monetary items are report- ments as a matter of prudence. ed using the closing rate at the yearend. Non monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

32 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) 21.4 Investments Notes to Financial Statements Provision has been made for the diminution in the value of 21.1 Impairment of assets long-term investments to the extent considered doubtful by the management. In the opinion of the management the In the opinion of the Management based on estimates of diminution in net worth of the subsidiary in United States of the value in use of the various cash generating units of the America is considered to be temporary in nature on account company, there is no impairment in the value of the carrying of the future business potential of the company and hence no cost of fixed assets of the company within the meaning of Ac- provision is considered necessary at this stage. counting Standard – 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006. 21.5 Preferential warrants 21.2 Current assets, loans and advances The company had, during the year ended 31.03.2008, issued 25,50,000 convertible warrants of Rs. 10/- each at a premium (a) The Company has sought for confirmation of balances from of Rs 23 aggregating to Rs.8, 41,50,000/-. on payment of 10% concerned parties in respect of major accounts of sundry of the aggregate amount payable. As per the terms of the is- debtors, loans and advances and sundry creditors outstand- sue, each of these warrants are to be converted into one Eq- ing as at the year-end, which, however is received in some of uity share of Rs. 10/- each at a premium of Rs.23/ each within a the cases. period of 18 months from the date of issue of warrants at the option of the subscribers. In case any subscriber did not exer- (b) During the year, the company entered into an agreement with cise the option for such conversion within the prescribed pe- Kahani world Inc. Canada to acquire the IPR “ Raju, the rick- riod, the amount paid for was to be forfeited. As no subscriber shaw” under a 15 year license for further development and ex- exercised the option within the prescribed period, the amount ploitation as 78 X 7 minute episodes for worldwide TV broad- received as advance of Rs. 84,15,000 has been forfeited during cast. The company felt there is a potential to develop this into the year and carried to Capital Reserve under Reserves and a large product and the Canadian company was not having Surplus. immediate plans to develop this further. The Digital content was earlier being developed as 7 X 7 minutes episodes for 21.6 Secured loans DVD under a co production agreement with them and the company. The company had raised an invoice on them for A. The Federal Bank Limited: Rs.142 lacs. Consequent to the acquisition of this IPR, the com- The unexpired Bank Guarantees issued by the bank and out- pany has carried forward this amount due from Kahani World standing at the year end amounting to Rs.12.42 lacs is secured including further development cost incurred as Capital Work by counter guarantee by the company and also by way of a in Progress. The amount so far incurred by Kahani world inc in corporate guarantee of Accel Limited. developing this property is to be treated as their share of production cost to be recouped by them at an agreed percent- B. The State Bank of India: age of the revenue over the period of 15 years on commercial exploitation of this Digital Asset. a) The Cash Credit limits, Term Loan Limits and Non Funded Limits ( The Limits ) are secured by hypothecation of Raw (c) In the opinion of the Directors, the current assets, loans and Materials, Semi finished goods , finished goods, Intellectual advances have the value in which they are stated in the bal- property rights and receivables and hypothecation of assets ance sheet, if realized in the ordinary course of business. created out of bank finance. b) The Limits are also secured by equitable mortgage of com- (d) Bank balances include Rs. 45.55 Lacs In Current account & De- pany’s immovable properties at Trivandrum & Chennai posit accounts in respect of Systems & Services Division (SSD) c) The limits are further secured by assignment of lease de- business transferred w.e.f 1st April 2009 as stated in note no. posits with Chennai & Trivandrum Landlords. The loans are 21.8 below, which is yet to be transferred in the transferee’s also secured by Corporate Guarantee of Accel Limited and name by the Bank as at the year end. pledge of 750000 shares of Accel Transmatic Limited held by Accel Limited. 21.3 Taxation d) Secured loans include Rs. 502.92 lacs being Cash credit availed from State Bank of India for Systems & Services Divi- (A) Current taxes sion of the company which was hived off and sold during the year as stated in note no. 21.8. The transaction in the bank ac- Provision for current taxes have been made on the basis of count for the year reflects the transactions of erstwhile Sys- completed assessments and in other cases on the basis of re- tems & Services Division. The Cash Credit account has since turn filed / management computation. been closed. (B) Deferred taxes C. Hire purchase loans Break up of net Deferred Tax Asset / (Liability) at the yearend Hire Purchase loans are secured by hypothecation of the fixed amounting to Rs 31,56,160/- (Previous Year Asset Rs.12,40,782) assets acquired out of such loans. is as follows. 21.7 (a) Contingencies and commitments Particulars Deferred Deferred (Rupees in Lacs) tax asset / tax asset / March 31, 2010 March 31, 2009 (liability) as on (liability) as on 31.03.2010 31.03.2009 Outstanding bank guarantees / letter 148.15 129.19 of Credits - $ Liability Corporate Guarantee to a bank on 350.00 200.00 Difference between book and 1,53,59,053 1,41,51,408 behalf of an Associate Concern @ tax depreciation Claims Against the company not Nil 4.20 Others Nil Nil acknowledged as debts. Total 1,53,59,053 1,41,51,408 Sales tax Demands Nil Nil Assets Others 21.67 13.76 Carried forward Depreciation / 1,51,54,163 1,46,09,594 Business Loss $ Includes Rs.147.05 being Guarantees / Letter of Credits issued by banks on behalf of Systems and Services division (sold as of Others 33,61,050 7,82,596 01.04.2009) which is yet to be transferred in their name. Total 1,85,15,213 1,53,92,190 @ Also, Counter guaranteed by M/s Accel Limited. Net deferred Tax Asset / 31,56,160 12,40,782 (b) Estimated amount of Contracts remaining to be executed (Liability) on Capital account and not provided for (Net of Advances) is Rs. 24.66 Lacs (Previous year Rs.Nil) 33 Net deferred tax asset as at the yearend is not recognized as a matter of prudence. ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated)

21.8 Exceptional Items (b) Details of Payment to Auditors included under General ex- (a) During the year the company, pursuant to the approval of penses the members by way of a special resolution by postal ballot, transferred its Systems & Services Division carrying a Net As- March 31, 2010 March 31, 2009 set Book Value of Rs.788.30 Lacs as on April 1st 2009, to Accel Statutory audit 3,30,900 3,30,900 Frontline Services Ltd with effect from 01.04.2009, on a slump Tax audit ( On Payment Basis ) 55,150 56,180 sale basis for a total consideration of Rs 927.29 Lakhs. The profit on sale of the Systems & Services division representing the Other Services ( On Payment 97,064 79,476 sale consideration over and above the net asset value adjust- Basis ) ed in the books of accounts as on 01st April 2009 amounting to Rs. 138.99 lacs (net of tax Rs.138.99 lacs) is credited to profit 21.10 Dues to micro, small & medium enterprises and loss account as ‘profit on transfer of Business’. The details of the assets and liabilities transferred are as follows: The company has initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium En- terprises Development Act 2006. Since no intimation has been Particulars Rs. in Lacs received from the suppliers regarding their status under the Fixed Assets 120.83 said Act as at 31st March 2010, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In Current Assets Loans & Advances the opinion of the management, the impact of interest, if any, Inventories 504.30 that may be payable in accordance with the provisions of the Sundry Debtors 509.07 Cash & Bank Balances 32.47 Act is not expected to be material. Loans & advances 86.49 1,132.33 21.11 Obligation on Long Term non-cancelable finance lease Less: Current Liabilities & Provisions Current Liabilities 415.75 The obligation on account of long-term finance leases - en Provisions 49.11 tered into for computers is as follows: 464.86 Obligation on leases Net Current Assets 667.47 Fixed Assets & Net Current Assets 788.30 Particulars 2009-2010 2008-2009

Minimum lease payment (b) During the year the company divested 390000 equity shares Not later than 1 year 63,28,264 95,06,489 of Rs. 10 each representing 39% of investment in Accel IT Resources Limited (Formerly Accel Academy Limited) for a Later than one year but not Nil 55,40,870 consideration of Rs. 468 Lakhs, as per the decision taken by later than five years the board of directors in its meeting held on 31.10.2009. Con- sequent to this sale, Accel IT Resources Limited ceased to be Later than five years Nil Nil a associate of this company with effect from 01.10.2009. The Present value of minimum profit on sale of investments of Rs.234 Lacs (Previous year Nil) lease payments has been credited to Profit and Loss account. Not later than 1 year 59,35,057 76,62,417 (c) The company during the year sold 60 Equity Shares held in Later than one year but not Nil 51,47,661 its subsidiary Accel Solutions Inc, Japan for a consideration of later than five years Rs.3.64 Lacs. The resultant loss on such disinvestment amounting to Rs.7.94 Lacs is recognized in the Profit & Loss account. Later than five years Nil Nil

21.9 (a) Payment to Directors Finance charges recognized 19,38,579 32,74,228 in the p & l a/c Details of managerial remuneration u/s 198 ( Minimum remuneration within the limits of schedule XIII to the Companies Act payable to whole time Directors.)

March 31, 2010 March 31, 2009 Salaries & allowances 15,00,000 44,67,810 Commission Nil Nil Contribution to 9,360 9,360 provident fund

34 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated)

21.12 Segmental reporting

Business Segment: The management has identified the following business segments as its primary reporting segments.

1. Software Services 2. Animation Services (Rs. in Lacs)

Hardware Corporate Software Particulars products / Animation Total (unallocated) services services

Segment revenue

External sales net of taxes & duties Current year - - 1107.73 331.31 1439.04 Previous year - 1864.75 1124.56 604.70 3594.01 Total revenue Current year 372.89 - 1107.73 344.92 1825.54

Previous year 2.64 1881.06 1161.97 624.48 3670.15 Segment result Current year 287.91 - 152.26 (334.77) 105.21

Previous year (139.45) 117.90 224.19 (243.10) (40.46) Interest expense (net) Current year 9.61 - 28.36 204.22 242.20 Previous year 35.25 83.76 37.46 185.63 342.09 Non operational expenses Current year - - - 5.10 5.10 Previous year 2.94 59.33 5.19 1.05 68.51 Net profit / (loss) Current year 278.30 - 123.90 (544.09) (142.54) Previous year (177.63) (25.19) 181.54 (429.78) (451.06)

Other information Segment assets Current year 695.82 - 761.62 2446.84 3904.29

Previous year 535.98 1284.57 759.38 2354.51 4934.44

Segment liabilities Current year 695.82 - 761.62 2446.84 3904.29

Previous year 1896.06 953.29 360.18 1724.91 4934.44 Capital expenditure Current year 16.82 - 29.86 847.31 893.99 Previous year - 23.86 36.34 576.96 637.16 Depreciation Current year 3.26 - 61.30 221.97 286.53 Previous year 8.42 33.03 53.04 155.87 250.36 Non cash expenses other than depreciation Current year - - - 5.10 5.10 Previous year 2.94 59.33 5.19 1.05 68.51 35 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated)

Geographical Segment: The management has identified the D) Related parties with whom transactions have taken place during following geographical segments as its secondary reporting the year: segments. Subsidiaries & Associates: A. In India. 1. Accel North America Inc - Subsidiary B. Outside India. 2. Accel IT Resources Limited - $ Rs. in Lacs Out side 3. Accel Limited - $ Particulars In India Total India 4. Accel Systems Group Inc. - $ Segment revenue 5. Accel Frontline Services Limited - $ Current year 655.72 1,177.76 1,833.50 6. Accel Frontline Limited – Group Company Previous year 2,116.73 1,552.49 3,669.22 $ Entities under common control. Segment asset Current year 3285.22 619.07 3,904.29 E) Key Management Personnel: Previous year 4,155.58 778.86 4,934.44 Capital expenditure N R Panicker Chairman Current year 893.99 - 893.99 Philip John Whole time Director Previous year 624.93 12.23 637.16

21.13 Related party transactions Subsidiaries / Particulars KMP* Total A) Loans and advances/Sundry Debtors include amounts due Associates from / (to) Subsidiaries / Associates Rendering of Services 8,90,01,502 - 8,90,01,502 Receiving of Services 503,506 - 503,506 Remuneration to Whole - 31.03.2010 31.03.2009 time Directors 15,09,360 15,09,360 Finance (including loans Accel North America Inc. 3,39,01,911 1,91,24,033 & equity contributions in cash or in kind) 2,56,35,073 1,50,000 2,57,85,073 Accel Systems Group Inc. (62,583) (70,793) Cost of Shared services Accel IT Resources Limited 71,76,972 65,20,087 Guarantee Commission 10,80,000 - 10,80,000 Accel Limited Nil Nil received 2,74,000 - 2,74,000 Accel Frontline Services Limited 2,85,67,318 Nil Transfer of Business 9,60,00,000 - 9,60,00,000 Accel Frontline Limited Nil 15,99,373 Interest Received 2,75,000 - 2,75,000 Interest Paid 43,10,484 1,23,151 44,33,635

B) Current liabilities / Sundry Creditors include amounts due to Associates: *KMP = Key Managerial Personnel 31.03.2010 31.03.2009

Accel Frontline Limited 25,28,885 42,19,791 21.14 Earnings per Share Calculation of EPS both (Basic and diluted) Accel Frontline Services 2,43,516 Nil Limited Sl. Accel Media Ventures Particulars 31.03.2010 31.03.2009 1,45,000 7,00,000 No Limited 01 Profit / (Loss) after taxation (1,65,16,629) (4,43,19,048) C) Loan Funds include amount due to Associates: Profit available to Equity Shareholders 31.03.2010 31.03.2009 02 Less: Extra Ordinary Item 3,65,05,390 - 03 Profit Without Extra Ordinary Item (5,30,22,019) (4,43,19,048) Accel Limited 2,49,60,879 5,14,27,562 04 Weighted average number of 1,10,37,401 1,10,37,401 05 equity shares Accel Media Ventures 6,74,194 97,66,640 Diluted number of Shares 1,10,37,401 1,12,92,401 Limited 06 Basic earnings per share with Extraordinary Item (1.50) (4.02) Maximum amount outstanding at any time during the year: 07 Basic Earnings per Share without Extraordinary Item (4.80) (4.02) 08 Diluted earnings per share with 31.03.2010 31.03.2009 Extraordinary Item (1.50) (3.92) 09 Diluted Earnings per Share Accel Limited 5,27,58,570 5,14,27,562 without Extraordinary Item (4.80) (3.92) Accel Media Ventures 10 Total Nominal Value of Shares 11,03,74,010 11,03,74,010 1,02,74,194 97,66,640 Limited

36 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated)

21.15 Derivatives

II Reconciliation of present value of Rs. in ‘000 Rs. in ‘000 Sl.No Particulars 31.03.2010 31.03.2009 obligations Present Value of Obligation at the 01 Category wise Nil Nil beginning of the year 6,347.27 5,110.00 quantitative data Current Services Cost 1,069.48 1,574.26 about Derivative 02 instruments Interest Cost 481.73 412.79 03 outstanding at the Actuarial (gain)/loss (3,150.78) (122.26) Balance sheet date Benefits Paid (482.41) (627.52) Present value of obligation at the Purpose of Hedging end of the year 4,265.29 6,347.27 Foreign Currency Exposure that are Not Applicable Not Applicable not hedged by a III Net (Asset) / Liability recognized in Rs. in ‘000 R s. in 000,s derivative Instrument the Balance Sheet as at year end or otherwise: Due to creditors EURO 25,000 US $ 80,546 Present value of obligations at the Due from Debtors US$ 12,96,832 US $ 813,032 end of the year 4,265.29 6,347.27 JPY 34,25,383 JPY 14,414,747 Net Present value of unfunded CA$ Nil CA $ 320,000 obligation recognized as (asset) / GBP 4, 334 GBP 4,334 liability in the Balance Sheet 2,611.78 4,788.94

21.16 Employee Benefits IV Expenses recognized in the Profit Rs. in ‘000 R s. in 000,s and Loss Account a) Consequent to Accounting Standards 15 of Companies Current Service Cost 1,069.40 1,574.26 (Accounting Standards) Rules, 2006 becoming effective, the Interest Cost 481.73 412.79 company has adopted the said standard with effect from 1st Actuarial (gain) / loss recognized in (568.55) (155.38) April 2007. In the absence of balance in Reserves and Surplus the period as on that date, the difference in opening liability computed in Past Service Cost - - Total expenses recognized in the accordance with the revised standard amounting to Rs.21.15 Profit and Loss Account for the year 982.58 1831.67 lacs is being expensed on a straight line basis over a period of five years from that date. The balance amount remaining unrecognized as on 31st March 2009 is Rs.8.46 lacs. The Note: The above disclosures are based on valuation report of an Amount recognized in the accounts of the current year is independent actuary and relied upon by the auditors. Rs.4.23 lacs. 3. Long Term Employee benefits b) Disclosure required under AS15 – “Employee Benefits” Compensated absences (Leave encashment) – Unfunded (Revised 2005) Obligation

1. Defined Contribution Plan I Actuarial Assumption 31.03.10 31.03.00 Discount Rate (per annum) 7% 7% During the year, the company has recognized in the Profit Salary escalation rate * 5% 5% and Loss Account, an amount of Rs.29.42 lacs (Previous Year Expected average remaining lives Rs.48.28 lacs) on account of defined contribution towards of working employees (year) Provident Fund and Rs.3.88 lacs (Previous Year 8.84 lacs) towards Employees State Insurance Scheme. * The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors such as supply and demand in the 2. Defined Benefit Plans employment market. Gratuity – Funded Obligation

II Reconciliation of present value of Rs. In ‘000 Rs. In ‘000 I Actuarial Assumption 31.03.10 31.03.09 obligations Discount Rate (per annum) 7% 7% Salary escalation rate * 5% 5% Present Value of Obligation at the Expected average remaining beginning of the year 4,549.63 3,588.00 lives of working employees Current Services Cost 30,81.21 2,441.08 (year) Interest Cost 426.31 336.59 Actuarial (gain)/loss (5,252.74) (1,816.04) * The assumption of future salary increases takes into account of inflation, seniority, promotions and other Benefits Paid - - relevant factors such as supply and demand in the Present value of obligation at the employment market. end of the year 2,804.42 4,549.63 37 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) III Net (Asset) / Liability recognized in Rs. In ‘000 Rs. in ‘000 iii) Particulars of Stock the Balance Sheet as at year end Present value of obligations at the Opening Stock end of the year 2,804.42 4,549.63 April 1, 2009 April 1, 2008 Particulars Net Present value of unfunded Qty INR Qty INR obligation recognized as (asset) / TSL Products liability in the Balance Sheet 2,804.42 4,549.63 Others 1,74,00,299 58 1,57,23,752 UPS Products UPS Nil 27,16,463 IV Expenses recognized in the Profit and Rs. In ‘000 Rs. in ‘000 Others 1,42,76,837 721 42,92,836 Loss Account Traded Goods UPS & Batteries 2126 1,45,33,285 33,99,384 Current Service Cost 3081.21 2,441.08 Others 42,19,286 1,23,50,917 Work In Progress Interest Cost 426.31 336.59 – Animation & Actuarial (gain) / loss recognized in Software Units 5,03,15,681 2,45,73,901 Total 10,07,45,388 6,30,57,253 the period (2,557.25) (1,816.04) Past Service Cost 423.00 423.00 Total expenses recognized in the Profit and Loss Account for the year 1,373.27 1,384.63 Purchases March 31,2010 March 31, 2009 Particulars Note : The above disclosures are based on valuation report of an Qty INR Qty INR independent actuary and relied upon by the auditors.

Traded Goods 21.17 (a) Additional Information pursuant to Part II of Schedule VI of UPS & Batteries Nil 5,55,83,277 the Companies Act, 1956 Others Nil 1,12,99,236

i)Particulars of Capacity Total Nil 6,68,82,513 March 31, 2010 March 31, 2009 Installed Capacity In Numbers In Numbers TSL Products Closing Stock Point of Sale Terminal Nil 504 Multi Function Kiosks Nil 192 March 31,2010 March 31, 2009 Particulars Intelligent message Nil 300 Qty INR Qty INR terminal Nil 266 Cheque Deposit Machines Nil 192 TSL Products Others Nil 1,74,00,299 Queue Management Nil 6 UPS Products System UPS Nil Nil Others Nil 1,42,76,837 Ticketing Machines Nil 360 Traded Goods UPS Products Nil 120 UPS & Batteries Nil 2126 1,45,33,285 Others Nil 42,19,286 UPS Work In Progress – Inverters Animation & Software Units 40,47,005 5,03,15,681

ii) Production Details: Total 40,47,005 10,07,45,388 March 31, 2010 March 31, 2009 Particulars In Qty In Qty

TSL Products

Point of sale / collection Nil 1 terminals Nil 53 Multi function kiosks Nil 150 Intelligent message terminal Nil 1 L C R Nil 266 Cheque deposit machines Nil 106 Queue management system Nil 6 Ticketing Machines UPS Products Nil 1366 UPS

38 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) (d ) CIF Value of Imports

March 31, 2010 March 31, 2009 Raw Material & Nil 2,81,29,400 Turnover Components Capital goods Nil 46,22,964

March 31, 2010 March 31, 2009 Particulars (e) Earnings in foreign currency Qty INR Qty INR TSL Products March 31, 2010 March 31, 2009 Towards income from Point of sale / 12,89,09,933 13,99,05,402 collection terminals Nil Nil services Multi function kiosks Nil 53 1,34,00,685 Intelligent message (f) Expenditure in foreign currency terminal Nil 150 28,44,768 March 31, 2010 March 31, 2009 Cheque deposit machines Nil 62 1,91,98,198 Services 19,75,795 14,31,859 Queue management Towards Foreign system Nil 106 61,43,984 Travel 74,35,200 1,33,34,199 Cheque Drop Machines Nil 204 1,34,30,930 Ticketing Machine Nil 6 64,895 (g) Number of Non Resident Shareholders and dividends paid to Others Nil 75,95,969 them. (On payment basis) UPS Products UPS & Inverters Nil 1375 4,78,46,168 Traded Goods Number of Share Particulars Dividend Paid UPS & Batteries Nil 4,74,26,436 Holders Others Nil 2,13,63,764 Non Resident Nil Nil Indians Total Nil 17,93,15,797 21.18 Comparative financial information

Material Consumption Previous year’s figures have been regrouped / reclassified March 31, 2010 March 31, 2009 wherever necessary to conform to the current year’s presentation. Particulars In Qty In INR In Qty In INR Vide our report of even date For and on behalf of Hardware Products Monitors Nil 160 940186 the Board of Directors CPU & Assemblies Nil 133 2694636 M/s Varma & Varma VFD Display Nil Nil Firm Registration No. 4532S Mechanisms Nil Nil Chartered Accountants N.R. Panicker LCD Display Nil 312 165199 Chairman Slip Printers Nil 176 1665146 Display Counters Nil Nil K M Sukumaran F.C.A A. Mohan Rao Cash Acceptors Nil 131 9,45,813 Membership No: 15707 Director Barcode Scanner Nil 110 3,44,469 Partner Thermal Printers Nil 463 26,76,954 Philip John Touch Screen Nil 225 8,21,665 Director Card Reader Nil 122 3,61,228 MICRS Nil 385 21,28,101 Coin Validators Nil 56 2,57,789 Place : Chennai S.T. Prabhu PCB Assembly Nil 208 3,49,788 Date: May 27, 2010 Company Secretary Transformers Nil Nil Rabbit cores Nil 280 7,38,653 Thin Clients Nil Nil GSM Modems Nil 209 7,19,599 Cabinets Nil 867 27,74,843 TSL Others Nil 1,53,91,149 Others UPS Nil 2,39,04,379

Total Nil 5,68,79,597

(c) Consumption of Stores & Spare parts March March Particulars Percentage Percentage 31,2010 31,2009 Imported Nil N.A 1,61,78,927 28.44 Indigenous Nil N.A 4,07,00,670 71.56

39 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details Registration Number 09-4485 Balance Sheet Date 31st March, 2010

II Capital raised during the year (Amounts in Rs. Thousands) Public Issue NIL Rights Issue NIL Bonus Issue NIL Share Application NIL

III Position of mobilisation and development of funds (Amount in Rs. Thousands)

Total Liabilities 395,702 Total Assets 395,702

Sources of Funds Paid -Up Capital 110,374 Reserves & Surplus 24,578 Secured Loans 225,315 Unsecured Loans 35,435

Application of Funds Net Fixed Assets 232,745 Investments 12,467 Net Current Assets 96,055 Misc.Expenditure - Accumulated Losses 54,436 Deferred Tax Asset (Net) -

IV Performance of Company (Amount in Rs.Thousands) Turnover 182,863 Total Expenditure 197,053 Profit/(Loss) before Tax (14,190) Profit/(Loss) After Tax (16,453) Earnings/Share in Rs. (9.10) Dividend @ % NIL

V Generic names of three principal products/services of company (as per monetary terms)

Item Code No.(ITC Code) Product description

Animation services Software development

40 ACCELACCEL TRANSMATICNORTH AMERICA LIMITED INC. Annual Report 2009-10

Directors Report

Directors - Mr. David Kumar Mr. P.B. Nair Mr. Philip John.

The directors have pleasure in presenting their report and the financial statements of the company for the year ended 31st March 2010.

The principal activity of the company during the year was marketing of software and animation services and provision of software development and services to various clients.

Year under review The performance of the company was as expected. The performance in the current year is expected to be better than the previous year and the company is expected to add new clients. The operations have resulted in a profit of INR 23.99 Lacs (USD 50,250). The company achieved a turnover from software development services of INR 1303.80 Lacs (USD 27,30,853).

The directors do not recommend payment of dividend on the shares.

The directors who served the company during the year are Mr. David Kumar, Mr. P.B. Nair, Mr. Philip John.

Considering there is no requirement to get the accounts audited and published under the laws of United States of America, the balance sheet and profit and loss account are not audited and are furnished herein as certified by the management.

For and on behalf of the Board of Directors

Philip John Director. Date : May 27, 2010 Place : Chennai.

Registered Office : Accel North America Inc. 111, North Market Street, 6th Floor, Suite 606, San Jose, CA 95113.

Balance Sheet as at

In INR In USD In INR In USD March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Sources of funds

Shareholders’ funds: Share capital 6,979,666 155,000 8,087,017 155,000 Reserves & Surplus - Foreign currency transalation reserve 386,942 111 (1,135,330) - 7,366,608 155,111 6,951,687 155,000 Loan funds: Unsecured 5,689,543 126,350 6,356,533 121,833 Total Liabilities 13,056,151 281,461 13,308,220 276,833

Application of funds Current assets, loans and advances: Sundry debtors 30,361,022 674,239 13,789,192 264,292 Cash and bank balances 12,543,278 278,553 2,946,673 56,477 Loans and advances 1,866,551 41,482 2,141,321 41,042 44,770,851 994,274 18,877,186 361,811 Less: Current liabilities and provisions Current Liabilities 38,458,271 854,057 14,825,741 284,158 Net current assets 6,312,580 140,217 4,051,445 77,653 Profit and loss Account ( Loss ) 6,743,570 141,244 9,256,775 199,180 Total assets 13,056,150 281,461 13,308,220 276,833

for and on behalf of the Board of Directors

Date: May 27, 2010 Philip John Place : Chennai. Director 41 ACCELACCEL TRANSMATICNORTH AMERICA LIMITED INC. Annual Report 2009-10

Profit and loss account for the year ended

In INR In USD In INR In USD March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Income Income from operations 130,380,319 2,730,838 88,984,619 1,914,705 Other income (6,429) 15 (2,435) 17 130,373,890 2,730,853 88,982,184 1,914,722 Expenditure Cost of services 90,342,433 1,892,237 71,925,373 1,547,637 Employee costs and benefits 24,320,609 509,399 14,281,544 307,300 Operating expenses 12,794,359 267,980 5,094,940 109,629 127,457,400 2,669,617 91,301,857 1,964,565 Profit before depreciation, interest and tax 2,916,490 61,236 (2,319,673) (49,844) Interest & finance costs 424,681 9,045 63,152 14,338 Profit / (loss) before taxation 2,491,809 52,191 (2,982,825) (64,182) Less: Provision for taxation Current year tax 92,671 1,941 99,969 2,151 Profit for the year carried to balance sheet 2,399,139 50,250 (3,082,794) (66,333)

for and on behalf of the Board of Directors

Date: May 27, 2010 Philip John Place : Chennai. Director

Notes to the Financial Statements – 31.03.2010

(i) Basis of presentation : Accel North America Inc. (ANAI) is a California Corporation formed on 02nd February 2007 and is based in San Jose, California. Accel Transmatic Limited, a Corporation based in India, owns all the shares of ANAI. ANAI provides services throughout United States to various private companies and other institutions.

(ii) Fiscal Year ANAI operates and reports using a fiscal year ending on the last day of March.

(iii) Cash and Cash equivalents Cash and cash equivalents consist of cash in hand and on deposit with a commercial Bank.

(iv) Accounts and Receivables ANAI derives substantially all its revenues from software services provided by its employees, independent contractors and holding company employees. The billing is on an hourly and/or man-month basis.

ANAI recognises contract revenue and records a receivable when the employees perform the services.

(v) Uses of estimates The Management makes estimates and assumptions while preparing the financial statements. Actual results could differ from these estimates.

42 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

To, The Board of Directors, Accel Transmatic Limited.

1. We have audited the attached Consolidated Balance Sheet of Accel Transmatic Limited (“the Company”) and its subsidiary M/s Accel North America Inc as at 31st March 2010, the Consolidated Profit and Loss Account and the Con- solidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. a. We did not audit the separate financial statement of the subsidiary companies, M/S Accel North America Inc whose unaudited financial statements reflect total assets of Rs. 447.70 lacs, total liability of Rs. 515.14 lacs as at 31st March 2010, net Profit of Rs. 23.99 lacs and net Cash inflow amounting to Rs. 95.97 lacs for the year/period ended on that date. The said financial statements have been furnished to us duly certified by the said companies’ directors, and our opinion in so far as it relates to amounts included in respect of the subsidiaries are based solely on this certificate.

b. Further, as stated in Note No 21.0 (a)(iv), the proportionate loss of an Associate Company for the period upto 30th September, 2009 has been consolidated in these Accounts on the basis of unaudited financials of that Company for the period upto that date, on which reliance has been placed by us.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting standards (AS) 21, Consolidated Financial Statements and Accounting Standards (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements notified by Compa- nies (Accounting Standards) Rules, 2006.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes on the accounts attached thereto, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Consolidated Balance Sheet, of the state of affairs of the company and its subsidiaries as at 31st March 2010;

ii. in the case of the Consolidated Profit and Loss Account, of the Consolidated results of the company and its subsidiaries for the year ended on that date; and

iii. in the case of the Consolidated Cash Flow statement, of the consolidated cash flows of the company and its subsidiaries for the year ended on that date.

For Varma & Varma Chartered Accountants F.R.N. 4532S

Place: Chennai K.M. Sukumaran, F.C.A Date : May 27, 2010 Membership No: 15707 Partner

43 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Consolidated Balance Sheet as at (All amounts are in Indian Rupees, unless otherwise stated) Sch No. March 31, 2010 March 31, 2009 SOURCES OF FUNDS Shareholders’ funds: Share capital 1 110,374,010 110,374,010 Advance received against Issue of share warrents - 8,415,000 Reserves and surplus 2 25,528,539 16,864,783 Minority interest - (37,209) 135,902,549 135,616,584 Loan funds: Secured 3 225,315,073 22,153,443 Unsecured 4 40,774,617 77,757,910 266,089,690 309,911,353

Total Liabilities 401,992,239 445,527,937

APPLICATION OF FUNDS Fixed assets: Gross block 5 297,348,096 262,349,327 Less: accumulated depreciation / amortization 87,305,247 100,802,469 Net block 210,042,849 161,546,858 Capital Work in progress 23,506,628 10,502,982 233,549,477 172,049,840

Investments 6 6,050,396 25,636,905 Current assets, loans and advances: Inventories 7 4,047,005 100,745,388 Sundry debtors 8 54,408,208 113,015,119 Cash and bank balances 9 18,087,382 16,952,523 Other current assets 10 22,955,829 16,459,373 Loans and advances 11 55,152,848 42,459,192 154,651,272 289,631,595 Less: Current liabilities and provisions Current liabilities 12 48,085,697 85,818,335 Provisions 13 5,416,210 8,745,956 53,501,907 94,564,291 Net current assets 101,149,365 195,067,304 Profit and Loss Account 14 61,243,001 52,773,888

Total assets 401,992,239 445,527,937

Significant accounting policies and notes attached to accounts 21 Vide our report of even date

For and on behalf of the Board of Directors

M/s Varma & Varma N.R. Panicker A. Mohan Rao Firm Registration No. 4532S Chairman Director Chartered Accountants

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary

Place : Chennai Dated : May 27, 2010

44 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Consolidated Profit and loss account for the year ended (All amounts are in Indian Rupees, unless otherwise stated) Sch March 31, 2010 March 31, 2009 No. Income Income from operations 15 185,591,372 402,119,354 Less: excise duty - 12,642,830 Net income from operations 185,591,372 389,476,524 Other income 16 4,803,327 10,260,586 Profit on sale of investments / business (net) 16-A 41,835,673 - 232,230,372 399,737,110 Expenditure Materials consumed 17 - 56,879,597 ( Increase ) / decrease in stock 17-A (473,554) (20,882,240) Cost of sales ( traded goods / services) 17-B 4,859,192 66,252,835 Employee costs and benefits 18 111,279,029 179,621,046 Operating expenses 19 74,677,897 109,059,063 190,342,564 390,930,301 Profit before depreciation, interest and tax 41,887,808 8,806,809 Interest & finance costs 20 24,997,139 35,769,655 Depreciation 5 28,652,629 25,035,927 Profit / ( loss ) before tax (11,761,960) (51,998,773) Less: taxation for the year - Current tax 825,144 132,236 - Fringe benefit tax - 1,529,612 - Deferred tax - (2,352,843) - Income tax of earlier years 1,530,385 - Profit / ( loss ) after tax (before minority interest) (14,117,488) (51,307,778) Less: minority interest - (32,200) Profit / (loss) for the year available for appropriation (14,117,488) (51,275,578) Less: appropriation - - Proposed dividends - - - On preference shares - 31,068 Tax on dividend - 5,282 Balance of profit / (loss) carried to balance sheet 14 (14,117,488) (51,311,928) Basic earnings per share (1.28) (4.65) Basic earning per share excluding extra ordinary item (5.07) (4.65) Diluted earnings per share (1.28) (4.54) Diluted earnings per share excluding extra ordinary item (5.07) (4.54)

Significant accounting policies and notes attached to accounts 21 Vide our report of Even Date For and on behalf of the Board of Directors

M/s Varma & Varma N.R. Panicker A. Mohan Rao Firm Registration No. 4532S Chairman Director Chartered Accountants

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary

Place : Chennai Dated : May 27, 2010

45 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Consolidated Cash Flow Statements for the year ended, (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009 Amount Amount A Cash flow from operating activities Profit before taxation from operations (11,761,960) (51,998,773) Adjustments for: Depreciation 28,711,095 25,035,927 Profit on sale of assets (13,899,963) - Profit on sale of investments (27,935,710) - Interest – net 24,689,297 33,120,137 Dividends received (3,880) (5,703) Profit on sale of investment 11,560,839 58,150,361 Operating profit/[loss] before working capital adjustment (201,121) 6,151,588 Adjustments for: Sundry debtors 58,606,911 7,706,170 Inventories 96,698,383 (37,688,135) Loans and advances (19,190,112) 8,667,747 Payment of dividends - (331,190) Trade payables (41,062,384) 11,826,051

Cash generated from operations 94,851,677 (3,667,769) Income tax paid (2,355,529) 690,995 Net cash flow from operating activites 92,496,148 (2,976,774) B Cash flow from investing activities Sale / (purchase) of fixed assets - net (76,310,769) (53,000,144) Sale of investments 53,170,595 - Purchase of investments - (367,836) Interest received 307,842 2,649,519 Dividends received 3,880 5,703 Net cash flow from investing activities (22,828,453) (50,712,758) C Cash flow from financing activities Increase in share capital ( share application ) - (2,100,000) Proceeds from / (repayment of) long term borrowings (43,821,663) 78,009,799 Net increase of cash credit and other short Term borrowings - 19,254,727 adjustment on account of consolidation (Minority interest & foreign currency translation reserve) 285,965 1,938,021 Interest paid (24,997,139) (35,769,657) Net cash flow from financing activities (68,532,837) 61,332,890 Net increase in cash/cash equivalents 1,134,859 7,643,358 D Cash and cash equivalents Opening cash and cash equivalents 16,952,523 9,309,165 Closing cash and cash equivalents 18,087,382 16,952,523 Notes: 1. Cash and Cash Equivalents include Cash in Hand & remittances in transit, Balance with Banks on current Accounts and Margin Money Deposit Ac counts. 2. The above Cashflow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard onCash Flow Statement [As-3] issued by the Institute of Chartered Accountants of India. 3. Previous year figures have been rearranged/regrouped wherever necessary. 4. This is the Cashflow Statement referred to in our report of even date.

Significant accounting policies and notes attached to accounts 21 Vide our report of even date

For and on behalf of the Board of Directors

M/s Varma & Varma N.R. Panicker A. Mohan Rao Firm Registration No. 4532S Chairman Director Chartered Accountants

K M Sukumaran F.C.A Membership No: 15707 Philip John S.T. Prabhu Partner Director Company Secretary 46 Place : Chennai Dated 27th May 2010 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the Consolidated financial statements as at

(All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009

1 Share capital

Authorised 19,750,000 ( 19,750,000) Equity Shares of Rs.10/- each 197,500,000 197,500,000 250,000 ( 250,000 )12% cumulative redeemable preference shares of Rs. 10/- each 2,500,000 2,500,000

Issued, subscribed and paidup : 11037401 ( 11037401 ) Equity shares of Rs.10/- each fully paid up 110,374,010 110,374,010 110,374,010 110,374,010

2 Reserves and surplus Capital reserve Opening balance 1,782,500 1,782,500 Add: Share application money forfeited (See Note No.21.5) 8,415,000 - 10,197,500 1,782,500

Capital redemption reserve 2,100,000 2,100,000

Revaluation reserve 12,339,044 12,397,510 Less: depreciation on revaluation 58,466 58,466 12,280,578 12,339,044 Foreign currency translation reserve 950,461 643,239 25,528,539 16,864,783

3 Secured loans From a Bank - Cash credit (See note: 21.6) 112,069,999 113,255,155 - Term loan 106,727,113 102,708,866 Hire purchase loans 6,517,961 16,189,422 225,315,073 232,153,443

4 Un secured loans Public deposits 9,450,000 10,207,174 Term loans - from financial institution / others 5,689,543 6,356,534

Inter corporate loans 25,635,074 61,194,202 40,774,617 77,757,910

47 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

- - - - - (0) (17) 9,083 As on As 21,141 67,633 (26,348) (10,660) (161,024) (899,832) 1,503,561 4,410,545 7,032,972 2,769,501 1,150,992 2,260,545 62,047,113 (2,928,434) 12,280,000 18,804,522 23,147,677 14,050,880 11,990,711 (4,602,686) (7,639,093) (6,888,201) (8,290,604) (1,086,781) (2,612,063) (1,256,393) 31.03.2009 123,364,322 161,546,858 (12,280,000) (11,639,434) (42,964,802) (20,162,967)

- 0 ------0 (0) As on As (9,083) (67,633) (21,141) 6,760,479 1,864,030 4,218,404 4,784,416 3,934,196 Net Block Net 69,779,264 12,280,000 51,778,488 12,823,278 17,942,760 12,061,581 11,815,953 (2,769,503) (4,410,545) (7,032,974) (1,150,992) (2,260,545) (1,503,561) 31.03.2010

161,546,858 210,042,849 (12,280,000) (18,804,503) (14,050,880) (11,990,713) (62,047,113) (23,147,676)

------Upto Upto 822,070 232,674 150,290 (40,678) (278,38) (956,000) (349,901) 31.03.2010 1,928,276 8,866,384 1,252,271 3,969,511 1,600,468 6,216,964 9,486,926 1,924,134

87,305,247 40,821,179 10,034,100 (2,468,317) (3,943,535) (1,761,887) (1,736,135) (2,449,676) (1,462,198) (1,203,953) (6,216,964) (1,231,079)

100,802,469 (21,002,343) (44,832,102) (10,869,321)

------17 (17) 64,795 40,678 956,000 (52,476) 118,552 278,380 117,227 650,451 (66,059)

1,080,789 4,800,204 1,771,510

1,462,198 42,208,320 16,944,420 14,041,651 Disposals/ Adjustments Adjustments

------Year Year

(5,207) (1,577)

For the For 192,141 396,515 822,070 162,245 574,105 (88,751)

(158,931) (192,141) (249,551) (351,518) (899,850) (384,930) (200,276) 5,608,183 4,808,479 3,964,984 2,151,645 28,711,095 25,094,393 10,030,728 (2,700,900) (1,081,935) (2,672,490) (3,639,162) (12,467,174) Depreciation Depreciation

- - - - -

Upto Upto 40,678 278,380 956,000 349,901 (66,059) (39,101) (78,104) 1,203,953 (867,249) (344,694) (852,435) 1,736,135 1,462,198 6,216,981 3,943,535 1,231,079 1,761,889 2,449,676 2,468,317 75,826,628 21,002,325 44,832,102 10,869,320 (1,602,956) (1,543,994) (1,386,382) (1,212,647) (5,317,131) (1,271,045) (1,231,079) (7,230,159) (2,064,746) 01.04.2009 100,802,469 (18,353,919) (32,364,928)

------

232,674 150,290 (49,761) (371,042) (346,013) 6,760,479 6,146,680 2,459,561 3,464,498 6,216,964 5,858,330 6,036,687 21,302,879 12,280,000 21,689,662 92,599,667 27,976,860 16,031,092 70,601,334 (4,531,390) (6,146,680) (2,613,190) (3,464,498) (6,216,963) (1,231,079) (9,482,648) Total as on Total 31.03.2010 297,348,096 262,349,327 (12,280,000) (39,806,846) (16,519,197) (15,934,245) (34,016,997) (106,879,215)

------

Sale / 64,794 49,761 346,013 227,083 138,368 Transfer Transfer 1,080,789 (227,083) 6,724,467 2,459,561 1,105,276 3,597,898 2,613,190 54,400,480 21,319,781 14,900,582

------

621,034 684,330 617,171 151,937 (267,909) 6,760,479 1,326,940 (335,919) (529,703) (313,762) 3,202,597 5,433,427 89,399,249 70,601,334 63,300,460 (6,623,871) (6,842,211) (3,023,766) Additions/ Additions/ (13,813,834) (31,549,485)

Adjustments Adjustments Gross Block Stated at Cost at Block Stated Gross

- - -

49,761 346,013 371,042 (78,104) (49,761) (227,083) (371,042) 4,531,390 6,146,680 2,459,561 9,482,648 2,613,190 3,464,498 6,216,964 1,231,079

Cost as on Cost 12,280,000 39,806,846 34,016,997 16,519,197 15,934,246 (4,531,390) (6,146,680) (2,123,642) (8,952,947) (9,676,986) (2,299,428) (3,464,498) (6,216,963) (1,231,079) 01.04.2009 262,349,327 199,275,950 106,879,215 (12,280,000) (25,993,012) (75,329,730) (27,393,126) (12,910,479)

TAL TAL Particulars Land 1 ) Building (note: Factory Hold Building(Kinfra) Lease Building Modification and Machinery Plant Machines3) (note Processing Data Software Computer and Fixtures Furnitures Equipments Testing Office Equipments Electrical Fittings Library Books Supply System Water Development Prototype Vehicle IPR - Indian Fables Intagibles Goodwill Software Lisences Partitions Temporary TO Year Previous . . Sl No 31,2010 ended March the year for Statements Financial partSchedule forming of Consolidated unless otherwise stated) in Indian Rupees, are amounts (All Assets 5 Fixed 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Note: Reserve. with Revaluation is being adjusted of Rs.58,466/- of Revaluation on account Depreciation The 1. figures year Previous in brackets represents Figures 2. Rs.38,36,688 (credit) Includes prior period in depreciation adjustments 3.

48 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the Consolidated financial statements as at (All amounts are in Indian Rupees, unless otherwise stated)

6 Investments -- Long Term March 31, 2010 March 31, 2009

Unquoted (Trade) at cost

Accel IT Resources Limited 6,000,000 25,586,509 [1,00,000 (490000) Equity shares of Rs.10/- each fully paid up ]

Quoted [Non-Trade] at cost

Rajashree Sugars and Chemicals Ltd 1,575 1,575 [65 (65) Equity shares of Rs.10/- each fully paid up]

State Bank of India 20,900 20,900 [60 ( 60) Equity shares of Rs.10/- each fully paid up ]

ICICI Bank Limited [125 (125) Equity shares of Rs.10/- each fully paid up ] 25,756 25,756

Pittsburgh Iron and Steels Ltd ( Formerly S & Y Mills Limited) 2,165 2,165 [500 (500) Equity shares of Rs.10/- each fully paid up]

[Aggregate market value of quoted shares as on the date of Balance Sheet is Rs.2,51,538/- (Previous year Rs.111,559/-)]

6,050,396 25,636,905

7 Inventories ** Raw materials - components - 23,458,562 - Stores & Spares - 12,502,763 Finished goods / semi finished goods - 14,468,382

Work in progress 4,047,005 50,315,681 4,047,005 100,745,388

8 Sundry debtors Unsecured considered good Debts exceeding six months 14,870,393 39,823,265 Other debts 39,537,815 73,191,854 54,408,208 113,015,119

9 Cash and bank balances Cash in hand and remittances in transit ( Including Cheques in Hand ) 4,760 89,560 Balances with scheduled banks : in Current accounts 13,943,438 13,095,031 in Deposit accounts 3,968,159 3,595,825 Unclaimed dividend accounts 171,025 172,107 18,087,382 16,952,523 ** refer note 21.8(a) * refer note 21.8(b)

49 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the Consolidated financial statements as at (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009

10 Other Current Assets Accrued Interest / Income 142,198 738,703 Unbilled revenue 22,813,631 15,720,670 22,955,829 16,459,373

11 Loans and advances (Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received 46,156,103 23,381,038 Deposits 8,996,745 19,078,154 55,152,848 42,459,192

12 Current liabilities Sundry creditors for goods supplied - Due to Micro , Small & Medium Enterprises (See Note No.21.12) - - - Due to Others 21,334,436 41,063,731 Creditors for Expenses 21,208,185 31,048,099 Other Liabilities 3,926,557 7,185,556 Advances received from customers for supply of goods & services 1,445,494 6,348,842 Unclaimed dividend * 171,025 172,107

48,085,697 85,818,335

13 Provisions for Fringe Benefit Tax ( net of Advance Tax ) - 420,958 Employee Benefit Plans 5,416,210 8,069,585 Warranty - 255,413 5,416,210 8,745,956

14 Profit & Loss Account - Debit Balance Opening Balance 52,773,888 (638,040) Less: Loss in relation to Accel Solution Japan Inc Adjusted 5,648,375 - 47,125,513 (638,040) Less :Transfer to capital redemption reserve - 2,100,000 47,125,513 1,461,960 Add : Loss for the year carried from profit & loss account 14,117,488 (51,311,928) Balance in profit & loss a/c 61,243,001 52,773,888

* { to be transferred to Investor Education & Protection Fund in the respective years if remaining Unpaid }

50 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the Consolidated financial statements for the year ended (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009

15 Income from operations Sales income Manufacturing sales - 102,165,355 Trading sales - 77,150,442 Less: vat & sales tax - 10,630,897 - 168,684,900 Service income Maintenance and repair services - 30,361,923 Software services

Domestic 23,771,411 - Exports 161,819,961 203,072,531 185,591,372 233,434,454 185,591,372 402,119,354

16 Other income Interest income ( tds: Rs.55,825 ( Rs.1,29,942 ) ) 307,842 2,649,519 Liabilities no longer payable written back 1,361,275 2,956,203 Rent received 756,200 - Guaranteed commission received 274,000 211,408 Royalty income 2,106,767 - Miscellaneous income 4,405 5,703 Foreign exchange variation (7,162) 4,437,753 4,803,327 10,260,586 16-A profit on sale of investments / business (net) Profit on sale of investments 28,730,283 - Less: loss on sale of investments 794,573 - 27,935,710 - Profit on transfer of Systems & Services Division 13,899,963 - 41,835,673 - 17 Materials consumed Opening stock of materials 23,458,562 17,503,820 Less: stock of systems & services division transferred 23,458,562 - Add: purchases - 65,981,837 - 83,485,687 Closing stock of materials - (23,458,562) - 60,027,125

Less : obsolete inventory written off - 3,147,528 - 56,879,597

17-A : (Increase) / decrease in stock [finished goods] Closing stock 4,047,005 47,885,372 Opening stock Opening balance 47,885,372 27,003,132 Less: stock of systems & services division transferred 2,046,548 - Less: transferred to capital work in progress 42,265,374 -

3,573,450 27,003,132 (473,554) (20,882,240)

51 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

Schedules forming part of the Consolidated financial statements for the year ended (All amounts are in Indian Rupees, unless otherwise stated) March 31, 2010 March 31, 2009

17-B : cost of sales ( traded goods ) & services Opening stock 24,924,597 15,750,301 Less: stock of systems & services division transferred 24,924,597 Purchases 4,859,192 75,427,131 4,859,192 91,177,432 Closing stock of material - (24,924,597) 4,859,192 66,252,835 Closing stock carried to inventory schedule - 24,924,597

18 Employee costs and benefits Salaries allowances and bonus 100,219,416 164,317,853 Contribution to welfare funds 5,685,767 9,013,815 Staff welfare expenses 5,373,846 6,289,378 111,279,029 179,621,046

19 Manufacturing & operating expenses Rent 13,507,456 21,958,781 Electricity charges 6,630,977 6,385,820 Repairs and maintenance Plant & machinery 790,353 200,285 Buildings 815,580 657,991 Others 2,178,488 4,410,839 Printing and stationery 445,317 1,914,381 Rates & taxes 930,779 268,766 Communication costs 4,776,701 8,291,040 Travelling and conveyance 14,589,471 28,122,546 Insurance 2,304,814 2,894,834 General expenses 12,877,404 14,555,653

Foreign exchange variation 3,257,190 - Advertisement expenses 760,837 1,510,260 Sales promotion expenses 4,778,487 3,766,930 Warranty support charges - 255,413 Bad debts written off 510,445 5,989,883 Packing and forwarding expenses 193,315 4,062,150

Share of loss in associate company 5,330,283 3,813,491 74,677,897 109,059,063

20 Interest & finance costs On fixed loans 14,551,297 14,507,542 Other loans 10,169,822 19,706,455 Bank charges 276,020 1,555,658

24,997,139 35,769,655

52 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

(c) Use of estimates Schedules forming p art of the financial statements (Continued) The preparation of Consolidated financial statements in (All amounts are in Indian Rupees, unless otherwise stated) conformity with generally accepted accounting principles requires estimates and assumptions to be made that effect the 21.0 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES reported amounts of assets and liabilities of the Consolidated financial statements and the reported amounts of revenues (a) Basis of Consolidation and expenses during the reporting period. Differences between actual results and estimates are recognized in the The consolidated financial statements comprises of the period in which the results are known / materialized. financial statements of Accel Transmatic Limited (the holding Company) and its following subsidiaries / associate (d) Fixed assets, depreciation and amortization

Subsidiary Companies : (i) Fixed assets

Name of the Country of Percentage of Holding Fixed assets are stated at cost or at replacement cost, in case of Company Incorporation revaluation, less accumulated depreciation and impairment, if Accel North United States of any, in the value of the assets. Cost of Fixed Assets includes all 100% America Inc America incidental expenses and interest cost on borrowings, where applicable attributable to the acquisition of assets, up to the Associate Company: (Upto 30.09.2009) date of commissioning of the assets.

Country of (ii) Leased assets Name of the Company Percentage of Holding Incorporation Accel IT Resources Limited India 49% Fixed Assets acquired on Finance lease have been capitalized at lower of present value of minimum lease payments or fair The consolidated financial statements are prepared in value. These assets have been depreciated over the useful life accordance with Accounting Standard 21 on ‘Consolidated of the asset as technically ascertained by the companies. financial statements’ and Accounting Standards 23 on “Investments in Associates in Consolidated Financial (iii) Impairment of Assets Statements” The carrying amounts of Fixed Assets of the cash generating The consolidated financial statements are prepared on the units of the companies are reviewed at the Balance Sheet following basis: date to assess whether they are recorded in excess of their recoverable amounts, and where the carrying values exceeds (i) The financial statements of the holding company and its the estimated recoverable amount, the assets are written Subsidiary companies have been combined on a line by down to their recoverable amount. line basis by adding together like items of assets, liabilities, income and expenses except as stated below based on (iV) Depreciation / Amortization unaudited accounts of the subsidiaries duly certified by the management. Depreciation on fixed assets is provided for from the date the asset is ready to be put to use, under straight-line method, in (ii) The intra group balances, intra group transactions, thereon the manner and at the rates specified in Schedule XIV to the have been fully eliminated. Companies Act, 1956.

(iii) The financial statement of the overseas subsidiary used in the Asset Rate of depn / Amortization (%) consolidation is drawn up to the same reporting date as of the Plant and machinery 4.75 holding company. Office equipment 4.75 (iv) The Proportionate share of loss in Associate Company till Furniture and fixtures 6.33 the date it ceased to be an associate has been included in Computer hardware 16.21 consolidated results based on the un-audited financials of Computer software 20.00 that company till that date. Vehicles 9.50 (b) Basis of preparation of financial statements Lease hold improvements Over the lower of estimated useful lives of the assets or the primary The Consolidated financial statements have been prepared to period of the lease. comply in all material respects with the Accounting Standards notified under Companies (Accounting Standards) Rules 2006 Fixed assets individually costing Rs 5,000 or less are fully depreci- and the relevant provisions of the Companies Act, 1956. The ated on purchase during the relevant year. Assets installed in leased Financial Statements have been prepared under the historical premises are amortized over the lease period of the premises. Digi- cost convention on accrual basis. The Accounting policies tal Assets (Intangible) are amortized over the estimated life (rev- have been consistently applied by the company and except as enue earning potential) of such assets under written down value disclosed, are consistent with those used during the previous method year.

53 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) (e) Borrowing Costs Income from Service

Borrowing costs that are attributable to the acquisition or Income from Services is recognized on accrual basis, as follows construction or production of qualifying assets are capitalized and are inclusive of service tax: as part of the cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are (i) Annual Maintenance Contracts incurred. Income from Annual maintenance contracts is recognized (f) Intangible Assets proportionately over the period of the respective contracts. Accrued income shown under Other current assets represents (i) Intangible assets in the nature of software licenses are stated amount recognized based on services performed in advance at cost and are amortized over the estimated useful life of one of billing in accordance with contractual terms. to five years, using straight line method as technically assessed. Goodwill on amalgamation included under fixed assets in case (ii) Software Services of holding company, is amortized over a period of 5 years. Software services are either provided on a time & material (ii) Intangible assets in the nature of Digital Assets (Animation basis or on a fixed price basis. IT Services provided on a time Contents) are capitalized as and when it is completed and ready & material basis are recognized in the period in which the for commercialization and amortized over a period of revenue services are performed. IT Services provided on a fixed price earning potential as estimated by the management. Cost of basis are recognized based on the milestones as specified in the own / co production of Animation products and not ready contracts. Unbilled revenue shown under Other current assets for commercialization as at the year end is carried forward as represents amount recognized based on services performed in capital work in progress in the Balance sheet as at the yearend, advance of billing in accordance with contractual terms. if the management is convinced of the commercial viability of the same. Development expenses of animation products that (iii) Animation Services are not considered to be commercially viable are expensed. In respect of Animation services for third parties, income is (g) Investments recognized based on milestone achieved as specified in the contracts. In case of own production of Animated content Investments that are readily realizable and intended to be income is recognized on sale / licensing of such products. Share held for not more than a year, if any are classified as current of surplus from co production ventures is recognized as and investments. All other investments are classified as long-term when the same accrues after recoupment of the production investments. Current investments are carried at lower of cost cost in full as per the terms of the agreement. and fair value determined on an individual investment basis. Long-term investments are carried at cost except in case of (k) Employee benefits – Holding Company investment in associate, which is carried under Equity method of accounting. Provision is made where there is a fall in value i) Defined Contribution Plan: of long-term investments, which are other than temporary in nature. Provident Fund / Employee State Insurance Scheme Contribution to Provident Fund Scheme and Employee State (h) Cash Flow statement Insurance Scheme are charged to Profit and Loss Account in the year of contribution. There are no other obligations Cash flows are reported using the indirect method, whereby other than such contribution payable to the respective fund net profit before tax is adjusted for the effects of transactions / scheme. of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular ii) Defined Benefit Plan: revenue generating; investing and financing activities of the company are segregated. Gratuity

(i) Inventories Gratuity has been covered under Group Gratuity cum Assurance Scheme of Life Insurance Corporation of India. 1) Inventories, comprising of finished goods, spares, and Accrued Liability for gratuity as at the Balance Sheet date components and traded items, are stated at lower of cost or is ascertained on actuarial basis using projected unit credit net realizable value. Cost includes all expenses incurred in method and duly provided for. bringing the inventory to its present location and condition and is determined on first-in-first-out (FIFO) basis. iii) Compensated absences 2) Cost of production representing overheads incurred for Animation service contracts is carried over as work in progress Short term compensated absences are provided for based in the Balance Sheet as at the year-end under inventories. on estimates at gross undiscounted values. Long term compensated absences are provided for based on actuarial (j) Revenue recognition valuation.

Sale of Products Employee benefits – Overseas Subsidiary Companies

Sales (net of returns) are reported exclusive of sales tax, Salaries and allowances and other benefits due to the octroi, all other taxes, duties, rebates and discounts. Sales are employees of a short term nature have been duly provided recognized when significant risks and rewards of ownership for wherever applicable. As per the terms of employment, the are passed on to the buyer, which generally coincides with employees are not entitled to any long term employment delivery of goods. benefits. 54 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) (l) Taxes on Income income directly identifiable with / allocable to the segment including inter-segment revenue. Provision for current tax and fringe benefit tax is made based on the liability computed in accordance with the applicable tax 2. Expenses that are directly identifiable with / allocable to laws of respective companies as estimated by the management. segments are considered for determining the Segment Result. The expenses, which relate to the company as a whole and not Deferred Tax is recognized on timing differences between allocable to segments, are included under “Other Unallocable the accounting income and the taxable income for the expenditure”. year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. In respect 3. Income, which relates to the Company, as a whole and not of undertakings of the holding company the income of which allocable to segments is included in “Unallocable Corporate is exempt under section 10B of the Indian Income Tax Act, 1961, Income”. Deferred Tax liability on account of timing differences arising but getting reversed during the tax holiday period has not 4. Segment Result includes margins on inter-segment capital been recognized. jobs, which are reduced in arriving at the profit before tax of the company. Deferred Tax assets are recognized and carried forward to the extent that there is a virtual certainty as the case may be that v. Segment assets and liabilities include those directly sufficient future taxable income will be available against which identifiable with the respective segments. Unallocable such deferred tax assets can be realized. corporate assets and liabilities represent the assets and liabilities that relate to the company as a whole and not (m) Foreign currency transactions allocable to any segment. Unallocable assets mainly comprise of investments in Subsidiaries and Others. Unallocable For Indian Operations liabilities include provisions for employee retirement benefits & Taxation. i. Initial recognition – foreign currency transactions are recorded in the reporting currency, by applying to the foreign (ii) Inter Segment Transfer Pricing currency amount the exchange rate between the reporting currency and the foreign currency approximately at the date of Segment Revenue resulting from transactions with other the transaction. business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are ii. Conversion – Foreign currency monetary items are either determined to yield a desired margin or agreed on a reported using the closing rate at the yearend. Non-monetary negotiated basis. items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at (p) Accounting for Provisions, Contingent Liabilities & the date of the transaction. Contingent Assets

iii. Exchange Differences – Exchange Differences arising on A provision is recognized where the enterprise has a present the settlement or conversion of monetary items are recognized obligation as a result of past event and is probable that an as income or as expenses in the period in which they arise. outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are For Foreign Operations not discounted to its present value and are determined based on management estimate required to settle the obligation at The Consolidated financial statements of the foreign the Balance Sheet date. These are reviewed at each Balance subsidiaries, being a non-integral operation has been Sheet date and adjusted to reflect the correct Management translated in accordance with the provisions of Accounting estimates. Standard 11 issued under Companies ( Accounting Standards) Rules,2006. Contingent Liabilities are disclosed by way of notes to the Balance Sheet. Provision is made in the accounts in respect of (n) Earnings Per Share those liabilities which are likely to materialize after the yearend, till the finalization of accounts and have material effect on the The number of shares used in computing basic earnings per position stated in the Balance sheet. share is the weighted average number of shares outstanding during the year. The number of shares used in computing Contingent Assets are not recognized in the Consolidated diluted earnings per share comprises the weighted average financial statements as a matter of prudence. shares considered for deriving basic earnings per share and also the weighted average number of shares, if any, which Notes to the Consolidated financial Statements would have been issued on the conversion of all dilutive potential equity shares. 21.1 Impairment of Assets

(0) Segment Accounting In the opinion of the Management based on estimates of the value in use of the various cash generating units of the (i) Segment Accounting Policies companies, there is no impairment in the value of the carrying cost of fixed assets of the company within the meaning of Segment accounting policies are in line with the accounting Accounting Standard – 28 on Impairment of Assets issued policies of the Company. However, the following specific under Indian Companies (Accounting Standards) Rules 2006. accounting policies have been followed for segment reporting:

1. Segment Revenue includes Sales, Service and other 55 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) 21.2 Current Assets, loans and advances 21.4 Investments

(a) The Holding Company has sought for confirmation of Provision has been made for the diminution in the value of balances from concerned parties in respect of major accounts long-term investments to the extent considered doubtful by of sundry debtors, loans and advances and sundry creditors the management. outstanding as at the year end, which, however is yet to be received in some of the cases. 21.5 Preferential warrants

(b) During the year, the company entered into an agreement The company had, during the year ended 31.03.2008, issued with Kahani world Inc. Canada to acquire the IPR “ Raju, the 25,50,000 convertible warrants of Rs. 10/- each at a premium rickshaw” under a 15 year license for further development of Rs 23 aggregating to Rs.8,41,50,000/-. on payment of 10% of and exploitation as 78 X 7 minute episodes for worldwide TV the aggregate amount payable. As per the terms of the issue, broadcast. The company felt there is a potential to develop each of these warrants are to be converted into one Equity this into a large product and the Canadian company was not share of Rs. 10/- each at a premium of Rs.23/ each within a having immediate plans to develop this further. The Digital period of 18 months from the date of issue of warrants at content was earlier being developed as 7 X 7 minutes episodes the option of the subscribers. In case any subscriber did not for DVD under a co production agreement with them and exercise the option for such conversion within the prescribed the company. The company had raised an invoice on them period, the amount paid for was to be forfeited. . As no for Rs.142 lacs. Consequent to the acquisition of this IPR, the subscriber exercised the option within the prescribed period, company has carried forward this amount due from Kahani the amount received as advance of Rs.84,15,000 has been World including further development cost incurred as Capital forfeited during the year and carried to Capital Reserve under Work in Progress. The amount so far incurred by Kahani world Reserves and Surplus. inc in developing this property is to be treated as their share of production cost to be recouped by them at an agreed 21.6 Secured loans percentage of the revenue over the period of 15 years on commercial exploitation of this Digital Asset. A. The Federal Bank Limited:

(c) In the opinion of the Directors, the current assets, loans The unexpired Bank Guarantees issued by the bank and and advances have the value in which they are stated in the outstanding at the year end amounting to Rs.12.42 lacs is balance sheet, if realized in the ordinary course of business. secured by counter guarantee by the company and also by way of a corporate guarantee of Accel Limited. (d) Bank balances include Rs. 45.55 Lacs In Current & Deposit accounts in respect of Systems & Services Division (SSD) B. The State Bank of India: business transferred w.e.f 1st April 2009 as stated in note no. 21.8 below. a) The Cash Credit limits , Term Loan Limits and Non Funded Limits ( The Limits ) are secured by hypothecation of Raw 21.3 Taxation Materials, Semi finished goods , finished goods, Intellectual property rights and receivables and hypothecation of (A) Current Taxes assets created out of bank finance. In respect of Holding company and Indian Associate, provision b) The Limits are also secured by equitable mortgage of for current taxes have been made on the basis of completed company’s immovable properties at Trivandrum & Chennai assessments and in other cases on the basis of return filed / c) The limits are further secured by assignment of lease management computation . In respect of overseas subsidiaries, deposits with Chennai & Trivandrum Landlords. The loans provision for tax has been made as per applicable tax laws of are also secured by Corporate Guarantee of Accel Limited the respective countries as estimated by the management. and pledge of 750000 shares of Accel Transmatic Limited held by Accel Limited. (B) Deferred Taxes d) Secured loans include Rs. 502.92 lacs being Cash credit Break up of net Deferred Tax Asset / Liability as on March availed from State Bank of India for Systems & Services 31, 2010 amounting to Rs.31,56,160 /- (Previous Year Asset Division of the company which was hived off and sold Rs.12,40,782) is as follows.. during the year as stated in note no. 21.8. The transaction in the bank account for the year reflects the transactions Particulars Deferred Deferred of erstwhile Systems & Services Division. The Cash Credit tax asset / tax asset / account has since been closed. (liability) as on (liability) as on 31.03.2010 31.03.2009 C. Hire Purchase Loans – Holding company Liability Difference between book and 1,53,59,053 1,41,51,408 Hire purchase loans are secured by hypothecation of assets tax depreciation purchased out of such loans. Others Nil Nil Total 1,53,59,053 1,41,51,408 Assets Carried forward Depreciation / 1,51,54,163 1,46,09,594 Business Loss Others 33,61,050 7,82,596 Total 1,85,15,213 1,53,92,190 Net deferred Tax Asset / 31,56,160 12,40,782 (Liability)

56 Net Deferred Tax Asset as at the yearend is not recognized as a matter of prudence. ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) 21.7 (A) Contingencies and commitments (c) The company during the year sold 60 Equity Shares held in its subsidiary Accel Solutions Inc, Japan for a consideration (Rupees in Lacs) of Rs.3.64 Lacs. The resultant loss on such disinvestment March 31, 2010 March 31, 2009 amounting to Rs.7.94 Lacs is recognized in the Profit & Loss account. Outstanding bank guarantees / letter 148.15 129.19 of Credits - $ 21.9 Details of Payment to Auditors included under Corporate Guarantee to a bank on 350.00 200.00 behalf of an Associate Concern @ General expenses

Claims Against the company not Nil 4.20 March 31, 2010 March 31, 2009 acknowledged as debts. Statutory audit 3,30,900 3,30,900 Sales tax Demands Nil Nil Others 21.67 13.76 Tax audit ( On Payment Basis ) 55,150 56,180 Other Services ( On Payment 97,064 79,476 $ Includes Rs.147.05 being Guarantees / letter of credits issued Basis ) by banks on behalf of Systems and Services division (sold as of 01.04.2009) which is yet to be transferred in their name / favour / closed. 21.10 Obligation on Long Term non-cancelable finance @ Also, Counter guaranteed by M/s Accel Limited. lease

(B) Estimated amount of Contracts remaining to be executed The obligation on account of long term finance leases entered on Capital account and not provided for (Net of Advances) is into for computers is as follows: Rs.24.66 Lacs (Previous year Rs. Nil) Obligation on leases 21.8 Exceptional Items

(a) During the year the company, pursuant to the approval of Particulars 2009-2010 2008-2009 the members by way of a special resolution by postal ballot, Minimum lease payment transferred its Systems & Services Division (SSD) carrying a Net Asset Book Value of Rs.788.30 Lacs as on April 1st 2009, Not later than 1 year 63,28,264 95,06,489 to Accel Frontline Services Ltd with effect from 01.04.2009, on a slump sale basis for a total consideration of Rs 927.29 Later than one year but not later Nil 55,40,870 Lakhs. The profit on sale of the Systems & Services division than five years representing the sale consideration over and above the net Later than five years Nil Nil asset value adjusted in the books of accounts as on 01st April 2009 amounting to Rs. 139.99 lacs (net of tax Rs.139.99 lacs) Present value of minimum lease is credited to profit and loss account as ‘Profit on Transfer of payments Business’. The details of the assets and liabilities transferred are as follows: Not later than 1 year 59,35,057 76,62,417 Later than one year but not later Nil 51,47,661 Particulars Amt Rs. Lacs than five years Fixed Assets 120.83 Later than five years Nil Nil Current Assets Loans & Advances Inventories 504.30 Finance charges recognized in 19,38,579 32,74,228 Sundry Debtors 509.07 the p & l a/c Cash & Bank Balances 32.47 Loans & advances 86.49 1,132.33 Less: Current Liabilities & Provisions Current Liabilities 415.75 Provisions 49.11 464.86 Net Current Assets 667.47 Fixed Assets & Net Current Assets 788.30

(b) During the year the company divested 390,000 equity shares of Rs. 10 each representing 39% of investment in Accel IT Resources Limited (Formerly Accel Academy Limited) for a consideration of Rs. 468 Lakhs, as per the decision taken by the Board of Directors in its meeting held on 31.10.2009. Consequent to this sale, Accel IT Resources Limited ceased to be a Associate of this company with effect from 01.10.2009. The profit on sale of investments of Rs.234 Lacs (Previous year Nil) has been credited to Profit and Loss account.

57 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) 21.11 Segmental reporting

Business Segment: The management has identified the following business segments as its primary reporting segments.

1. Software Services 2. Animation Services (Rs. in Lacs) Hardware Corporate Software Particulars products / Animation Total (unallocated) services services Segment revenue

External sales net of taxes & duties Current year - - 1548.17 331.31 1879.48

Previous year - 1864.74 1426.31 604.70 3895.75 Total revenue Current year 424.59 - 1549.72 344.92 2319.23 Previous year 3.55 1892.91 1467.04 604.70 3968.20 Segment result Current year 287.91 - 181.22 (334.77) 134.36

Previous year (139.45) 117.90 183.73 (243.10) (80.92)

Interest expense (net)

Current year 9.61 - 33.04 204.22 246.87 Previous year 35.25 83.76 25.56 185.63 331.20 Non operational expenses Current year - - - 5.10 5.10 Previous year 2.94 59.33 5.19 1.05 68.51 Net profit / (loss) Current year 278.29 - 148.17 (544.09) (117.62)

Previous year (177.63) (25.19) 112.62 (429.78) (519.98)

Other information

Segment assets

Current year 689.51 - 806.14 2446.84 3942.49

Previous year 535.98 1284.57 698.12 2354.51 4873.18

Segment liabilities

Current year 689.51 - 806.14 2446.84 3942.49

Previous year 1896.06 953.29 298.92 1724.91 4873.18 Capital expenditure Current year 16.82 - 29.86 847.31 893.99 Previous year - 23.86 24.11 576.96 624.93 Depreciation Current year 3.26 - 61.30 221.97 286.53 Previous year 8.42 33.03 53.04 155.87 250.36 Non cash expenses other than depreciation Current year - - - 5.10 5.10 Previous year 2.94 59.33 5.19 1.05 68.51

58 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) Geographical Segment: The management has identified the following E) Key Management Personnel: geographical segments as its secondary reporting segments. N R Panicker Chairman

A. In India. Philip John Whole time Director B. Outside India.

(Rs. in Lacs) F) Transactions with related parties

Particulars In India Out side India Total Particulars Associates KMP* Total Segment revenue Current year 1,565.08 314.40 1,879.48 Rendering of services 26,65,107 - 26,65,107 Receiving of services 503,506 - 503,506 Previous year 1,927.76 2,040.44 3,968.20 Remuneration - 15,09,360 15,09,360 Segment asset Finance (including loans & equity contributions in Current year 3,662.44 280.05 3,942.49 cash or in kind) 2,56,35,073 1,50,000 2,57,85,073 Previous year 2,390.87 2,482.31 4,873.18 Cost of shared services 10,80,000 - 10,80,000 Capital expenditure Guarantee commission Current year 893.99 - 893.99 received 2,74,000 - 2,74,000 Transfer of business 9,60,00,000 - 9,60,00,000 Previous year 616.85 8.08 624.93 Interest received 2,75,000 - 2,75,000 Interest paid 43,10,484 1,23,151 44,33,635 21.12 Related party transactions

A) Loans and advances/Sundry Debtors include amounts due *KMP = Key Managerial Personnel from / (to) Associates: 21.13 Earnings per Share 31.03.2010 31.03.2009 Accel Frontline Limited Nil 1,599,373 Calculation of EPS both (Basic and Diluted) Sl. Particulars 31.03.2010 31.03.2009 Accel Systems Group Inc. (62,583)) (70,793) No Accel Frontline Services Limited 28,567,309 Nil Profit after taxation 01 (14,117,488) (51,311,928) Accel IT Resources Limited 7,176,972 6,520,087 Profit available to equity shareholders

02 Less: extra ordinary item 41,835,673 Nil B) Current liabilities / Sundry Creditors include amounts due to Associates: 03 Profit without extra ordinary item (55,953,161) (51,311,928) Weighted average number of equity 31.03.2010 31.03.2009 04 11,037,401 11,037,401 shares Accel Frontline Limited 4,219,791 4,219,791 05 Diluted number of shares 11,037,401 11,292,401 Accel Frontline Services Limited 243,516 Nil Basic earnings per share with 06 (1.28) (4.65) Accel Media Ventures Limited 145,000 700,000 extraordinary item Basic earnings per share without 07 (5.07) (4.65) C) Loan Funds include amount due to Associates: extraordinary item Diluted earnings per share with 08 (1.28) (4.54) extraordinary item 31.03.2010 31.03.2009 Diluted earnings per share without Accel Limited 2,496,0879 51,427,562 09 (5.07) (4.54) extraordinary item Accel Media Ventures Limited 674,194 9,766,640 10 Total nominal value of shares 110,374,010 110,374,010 Maximum amount outstanding at any time during the year: 31.03.2010 31.03.2009 21.14 Derivatives Accel Limited 52,758,570 51,427,562 Sl.No Particulars 31.03.2010 31.03.2009 Category wise quantitative Accel Media Ventures Limited 10,274,194 9,766,640 data about Derivative 01 Nil Nil instruments outstanding at D) Related parties with whom transactions have taken place the Balance sheet date during the year: 02 Purpose of Hedging Not Applicable Not Applicable Associates: 03 Foreign Currency Exposure that are not hedged by a derivative Instrument or 1. Accel Limited otherwise: 2. Accel Frontline Limited Due to creditors Euro 25,000 US$ 80,546 3. Accel Systems Group Inc. Due from Debtors US$ 12,96,832 US$ 8,13,032 4. Accel Frontline Services Limited JPY 34,25,383 JPY 1,44,14,747 CA$ Nil CA$ 3,20,000 5. Accel IT Resources Limited GBP 4,334 GBP 4,334

59 ACCEL TRANSMATIC LIMITED Annual Report 2009-10 (All amounts are in indian Rupess, unless otherwise stated) 20.15 Employee Benefits – Holding Company The above disclosures are based on valuation report of an independent actuary and relied upon by the auditors. a) Consequent to Accounting Standards 15 of Companies (Accounting Standards) Rules, 2006 becoming effective, the 3. Long Term Employee benefits company has adopted the said standard with effect from 1st April 2007. In the absence of balance in Reserves and Compensated absences (Leave encashment) – Unfunded Surplus as on 1st April 2007, the difference in opening liability Obligation computed in accordance with the revised standard amounting I Actuarial Assumption 31.03.10 31.03.09 to Rs.21.15 lacs is being expensed on a straight line basis over Discount Rate (per annum) 7% 7% a period of five years from that date. The balance amount remaining unrecognized as on that 31st March 2010 is Rs.8.46 Salary escalation rate * 5% 5% lacs. The Amount recognized in the accounts of the current year is Rs.4.23 lacs. * The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors b) Disclosure required under AS15 – “Employee Benefits” such as supply and demand in the employment market. (Revised 2005) Rs. in 000’s Reconciliation of present value of II 31.03.10 31.03.09 1. Defined Contribution Plan obligations Present Value of Obligation at the 4549.63 3,588.00 During the year, the company has recognized in the Profit beginning of the year and Loss Account, an amount of Rs.29.42 lacs (Previous Year Current Services Cost 3081.21 2,441.08 Rs.48.28 Lacs) on account of defined contribution towards Provident Fund and Rs.3.88 Lacs (Previous Year Rs. 8.84 Lacs) Interest Cost 426.31 336.59 towards Employees State Insurance Scheme. Actuarial (gain)/loss (5252.74) (1,816.04)

2. Defined Benefit Plans Benefits Paid / transferred - - Present value of obligation at the end 2804.42 4,549.63 Gratuity – Funded Obligation of the year

Net (Asset) / Liability recognized in the I Actuarial Assumption 31.03.10 31.03.09 III 31.03.10 31.03.09 Balance Sheet as at year end Discount Rate (per annum) 7% 7% Present value of obligations at the end 2804.42 4,549.63 Salary escalation rate * 5% 5% of the year Expected average remaining lives of Net Present value of unfunded working employees (year) obligation recognized as (asset) / 2804.42 4,549.63 liability in the Balance Sheet * The assumption of future salary increases takes into account of inflation, seniority, promotions and other Expenses recognized in the Profit and IV 31.03.10 31.03.09 relevant factors such as supply and demand in the Loss Account employment market. Current Service Cost 3081.21 2,441.08 Rs. in 000’s Interest Cost 426.31 336.59 Reconciliation of present value of II 31.03.10 31.03.09 Actuarial (gain) / loss recognized in the obligations (2557.25) (1816.04) period Present Value of Obligation at the 6347.27 5,110.00 beginning of the year Past Service Cost 423.00 423.00 Current Services Cost 1069.48 1,574.26 Total expenses recognized in the Profit 1373.27 1,384.63 and Loss Account for the year Interest Cost 481.73 412.79 Actuarial (gain)/loss (3150.78) (122.26) The above disclosures are based on valuation report of an Benefits Paid (482.41) (627.52) independent actuary and relied upon by the auditors. Present value of obligation at the end 4265.29 6,347.27 of the year Previous year’s figures have been regrouped / reclassified wherever necessary to conform to the current year’s III Net (Asset) / Liability recognized in the presentation. Balance Sheet as at year end 31.03.10 31.03.09 Present value of obligations at the end Vide our report of even date For and on behalf of 4265.29 6,347.27 of the year the Board of Directors Net Present value of unfunded M/s Varma & Varma obligation recognized as (asset) / 2611.78 4,788.94 Firm Registration No. 4532S liability in the Balance Sheet Chartered Accountants N.R. Panicker Chairman Expenses recognized in the Profit and IV R s.in 000’s R s.in 000’s Loss Account K M Sukumaran F.C.A A. Mohan Rao Current Service Cost 1069.40 1,574.26 Membership No: 15707 Director Interest Cost 481.73 412.79 Partner Actuarial (gain) / loss recognized in the Philip John (568.55) (155.38) period Director

Past Service Cost - - Place : Chennai S.T. Prabhu Total expenses recognized in the Profit 982.58 1,831.67 Date: May 27, 2010 Company Secretary and Loss Account for the year 60 ACCEL TRANSMATIC LIMITED Annual Report 2009-10

NOTES

61 NOTES NOTES NOTES